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Bridge's Bill Evans reports current state of medtech venture investing for MX magazine

Bill Evans  |  May 21, 2012  |   Comments (4)  |   Trackbacks (0)  |   Permalink

This article was published on Medical Device and Diagnostic Industry on May 16, 2012.

"In the 2000s, venture capital investments in healthcare and life sciences outperformed venture investments in tech." Device company executives could be forgiven for not having seen this recent quotation in a business press that tends to tout venture investment success by the likes of Facebook and Zynga.  This observation is from "In defense of life sciences venture investing," a recent article in Nature Biotechnology that has been picked up by other heavyweights in the device industry. 

That quote sits in stark contrast to a fact apparent to anyone close to medtech over the last decade or so: the costs of bringing products to market have escalated significantly. These state of affairs has been quantified and publicized in a survey titled FDA Impact on U.S. Medical Technology Innovation by Josh Makower, a medtech entrepreneur. “The average cost of taking a product through 510(k) clearance is $31 million, and the average cost of getting a product through PMA….is $94 million (excluding reimbursement and sales/marketing activities),” Makower reports. “For U.S. companies, these mounting costs are unsustainable in a venture-backed industry where [fewer] than one out of four medtech start-ups succeeds, 50% of all reported exits are less than $100 million, and the total pool of available investment capital is shrinking.”


These source articles reveal two seemingly contradictory trends over the last decade. On the one hand production costs have risen significantly; on the other, venture-investing medtech returns have outperformed tech investments at a time when it seemed that all the VC action was with Internet-related plays. Both are true. Digging deeper reveals how various investors, entrepreneurs, and other stakeholders have reacted to these changes. This exploration in turn uncovers what the next three to five years of medtech investing may look like.

Structural Changes

A survey of historic financial data will not necessarily show today’s medtech entrepreneurs where their funding will come from in the near future and what the next set of investors is likely to care about. At least four structural changes in the market account for this state of affairs:

• Shifts in investment amounts, timing, and risk appetites of venture money sources.
• Increasing regulatory and reimbursement pressures.
• Globalization of medtech funding and newly emerging markets. 
• Increasing emphasis on the overall cost of outcomes in a world of escalating healthcare costs.

The good news is that medtech investment insiders all seem bullish on the industry. Robert Curtis, CEO of Respira Therapeutics and a seasoned medtech chief executive with 10 start-ups, notes: “There have been some great successes in the device industry; it’s probably one of the most resilient of the regulated industries in the U.S.” Makower hopes “that brighter days are ahead. Medtech is a good place to invest in the future, but those involved must be exceptionally selective.” Reports on the latest medtech funding numbers support this optimism, showing an increase of approximately 33% in the first quarter of 2012 compared with the same period last year.

Of course, investors of any kind have always been selective, but anyone who has tried to raise money over the last few years has felt the chill wind of this exceptional selectivity. It affects who funds entrepreneurs and when they’re funded, and it creates bigger hurdles for a product to overcome.

Where Will VC Money Come From?

The current environment has scared a lot of investors off, changing where the early seed money is more likely to come from. Casey McGlynn leads the life sciences practice of the law firm Wilson Sonsini Goodrich & Rosati (Palo Alto, CA), which over the last two years helped privately raise about $1 billion for medical device companies. “Our industry has spent a lot of time analyzing and complaining about the performance of FDA, and rightfully so,” he notes. “Congress has heard us, and the institutional funds that invest in VCs also heard us, and I think we scared them about the difficulties our industry is facing.”

Compounding this regulatory tightness was, of course, the global financial meltdown. Curtis says that medtech started to feel the effects a little before 2008. “The financial market started to get constipated; money wasn’t flowing well. When that spigot got cut off, the funds looked at what they were doing and instead of investing in early stage start-ups they invested in later rounds of more mature start-ups because they could foresee getting to an exit earlier. On top of that came a shutdown in the IPO market, so for the most part, device companies couldn’t raise money from the public over the past few years. The sole exit has been to be purchased by a big medical device company.”

These pressures have lead VC firms to become more specialized. “Today’s VC firms don’t make the mistake of dabbling in areas in which they are unfamiliar,” says Steve Halasey, vice president of the Institute for Health Technology Studies (Washington, D.C.), which supports independent research and educational activities focused on medtech. “Firms have become increasingly specialized, even to the point that medtech VCs who have a strong interest in a sector such as cardiology might not deal in another area such as IVDs. For the investors who know what they’re doing, there’s no question that the returns in the medical device area have been very good.”

Regarding investor returns, Jonathan Wyler, a principal in SV Life Sciences (Boston) who specializes in medical devices, says, “On average in medtech it’s seven years until an exit, but many of the successful companies of recent years have taken over a decade to reach acquisition. This is a very long time horizon, and hence investors have to support the organization for a longer period, which means considerably more capital. To manage a venture fund to a three-times return, and because returns on successful medtech investments are generally not as high as in tech, it becomes critical to manage loss ratios by identifying the losers more quickly, manage to get your money back on as many as you can, and to avoid expensive investments with binary outcomes.”

This approach makes it harder for VCs to invest early in companies where outcomes are inherently less certain and holding periods are longer. “VCs are not running to invest in very early stage companies,” Wyler says. “Most are buying in later and looking for attractive economics, and much less frequently making an exception for only the most [distinctive] earlier stage opportunities with the very best teams.”

On top of these pressures VCs are feeling a chill from the institutional investors when they go out to raise their own new funds. “The risk-return in medtech relative to the substantial capital needed to get to an exit is different from the tech world,” Wyler says. “Institutional fund managers who are investing in many different asset classes are generally not into the detail of a particular product category or science, but [they] do recognize the headline level themes—depressed markets, challenges with FDA, healthcare reform, acquisitiveness of consolidators, and so on—and often generalize such issues to the entire medtech space. This complex environment has given large institutional funds pause in terms of investing in healthcare. However, these regulatory and other hurdles do create value-generating barriers, and with the right experience and expertise, such risks can be managed to create long-term value in a manner that is not typically present in the tech world.”


Historical returns from VC healthcare funds “are more consistent over time” than the high-profile IT and software successes, according to Rich Ferrari, cofounder of De Novo Ventures (Menlo Park, CA). Formerly CEO of two successful VC-backed, publicly traded medtech companies, Ferrari adds: “There are bubbles in technology, consumer, and electronics. When you look at healthcare, over the last decade or so, it really doesn’t have bubbles. It has a consistent gradual increase. Some returns in IT and technology look good, but they are small in numbers compared with the thousands of companies that are funded. So actually, healthcare does have a better [internal rate of return]. But the environment today for raising money as a healthcare fund is difficult. The institutional investors in VC funds look at these headline big IT returns and their 10-year return in healthcare, and they are not pleased with it.”

Angels ‘Alive And Well’

These twin pressures on the investment dollars available for VCs, both into and out of their funds, have meant other sources of funding have increased, especially for early-stage ventures. “Angels are alive and well,” says McGlynn. “At the earlier stages of a company they’re more active in putting more money in than ever before. In many ways the Series A venture financing is now being done by angel investors. To lure a five-star VC firm and build that first syndicate you really need to have a great animal beta, a great prototype, and in some cases even credible human data. We are doing a lot of early-stage work with angels and what you might think of as micro-venture capitalist funds. They’re slightly more institutionalized than just an individual investor.” Examples of very early investors, McGlynn says, are Aphelion Capital, X/Seed Capital, and MedFocus Fund. Angel groups include Life Science Angels, Angels Forum, and Bank of Angels, he says.

Another group of angel-like investors, family funds, is gaining momentum, particularly in Europe, Curtis says, “where the family funds model is more advanced; and in the Far East, places like Singapore, which has some fairly sophisticated investors.” McGlynn has also seen Asian sources of funding rise: “We see companies looking for capital in Singapore and other Asian countries where they can set up R&D at a low price, get grants from the government, and raise money from what you’d think of as offshore angel investors.”

Corporate Venture Investing

“There’s a resurgence in corporate venture capital,” says Curtis. “In the 1980s a lot of companies like Medtronic, Pfizer, and Boston Scientific invested in deals directly from their balance sheet. They then retrenched, but recently I have noticed that more corporations in pharmaceuticals as well as medtech have formed venture funds, or have partnered with experienced funds to invest in start-ups. These companies are beginning to invest broadly. As an example, Pfizer has invested in a couple of medical device deals that could replace pharmaceuticals in some areas. One is NovoCure, which uses a device for glioblastoma therapy. Novartis has looked at medical device deals. So far, not many of these funds are willing to invest in early stage deals, but at least the corporate interest has increased.”

The list of device companies with recently established corporate venture funds includes Covidien (August 2008), Abbott (June 2009), Baxter (July 2011), and Philips Healthcare (August 2010). These companies join the parade of existing players like Novartis, Medtronic, St. Jude, and Kaiser, all of which have longstanding venture investing arms. “The corporations in general have really stepped up to be major funders of new medtech companies, all the way down to the seed level,” notes McGlynn. “The business development people at these large medtech companies are very sophisticated people; they do their homework, they’ve got huge domain knowledge in their specialist area. They’re a bit more targeted than the venture capitalist. I think they’re under a tremendous amount of pressure to help find and fund the best new projects, and the exit might be a little bit earlier to the corporate investor than the venture capitalist. We just started a company with really exciting technology, and Covidien was the first investor.”

Other Funding Sources

“European venture funds are interested in investing in medtech companies that have a CE mark and want to commercialize in Europe,” McGlynn says. “So these late mezzanine rounds where we used to have a lot of interest from domestic VCs now have a lot of interest from international VCs.” He also notes that grants are a big source of capital today. “There’s a lot of money through DOD, SBIR, and NIH grants, as well as from foundations with an interest in the area a new venture is addressing.”

Curtis has seen a change in attitude about grants. “I think government grants are going to be increasingly important,” he says. “For the past 10 years, the venture community looked down their noses at device companies that received grants. Grants are attractive from a founder’s standpoint as they are non-dilutive, but it sets a government-financed research culture that the VCs find not very entrepreneurial. The state of Texas, for instance, has made two very large funds available for grants to Texas-based start-ups. Some states realize the benefits of doing this and will be able to stimulate their entrepreneurial economy.”

Regulatory Climate And Reform Hopes

Makower hopes for a new stable FDA environment because of these three changes:

• MDUFA guidance will be modified to incorporate key stakeholders feedback.1
• This legislation then passes, improving the efficiency and predictability of FDA.
• When it does pass, FDA quickly and vigorously pursues the changes needed for it to take effect.
 
Ferrari is optimistic about the near future. “I think we see that FDA is very serious about trying to make appropriate changes to streamline the system,” he says. “There’s a lot of effort going on between AdvaMed and other lobbying and industry groups working with FDA. I think we’re going to see improvements. It may still take us two to three years, but there is a tremendous amount of pressure from Congress to change the system. I think politically it’s going to happen.”

Advice To Entrepreneurs

Makower sums up advice for those device companies currently looking for early venture cash: “You need to be aggressive [and] resilient, and if you believe in what you are doing, don’t give up. If you have a choice of projects, choose one where the regulatory path is clear.”

Keeping your venture lean has become the new mantra to allow sparse investment dollars to go further. “Don’t quit your day job until you’ve made some progress with your new product,” Curtis advises entrepreneurs. “Make sure that every dollar goes to moving the product forward in the early days to get to a major milestone, like first-in-man. Then you’ll be better able to go out and raise more money at a decent valuation. Entrepreneurs should look at being entrepreneurial within the context of what they are already doing, and find other people who are interested in doing virtual incubation, making progress working evenings and weekends. There are some very smart and dedicated people in this industry. I think they’ll find new ways to do things faster, cheaper, and better.”

Ferrari also counsels a lean approach. “If you are going out to raise a seed or early round, the best validation to raise money is if you’ve already got some angel money or put some of your own money in,” he says. “If you haven’t done that, [then] when you pitch you’ve got to have a well-thought-out game plan. It might be best to approach the problem in small bites. For example, instead of asking for $10 million now, just raise $2 million, set up some very tight milestones, and run an efficient operation. Mitigate the risk of the program and then go on to raise the next piece. Inch your way along until the risk gets wrung out of the program. That’s a very efficient way to run a company, and the way we used to run them a decade ago.”

Wyler believes today’s leanness means something different than before. “I think it’s much harder to be the cliché engineer in the garage,” he says. “It’s a lot tougher today to go on your own as a first-time entrepreneur. Team up with proven people with a proven process. Connect with the incubators, connect with the successful entrepreneurs who have relationships with investors, and recognize that fundraising is likely to take longer and require more creativity and persistence than in the past.”

Demographic trends still make the medical device business an attractive investment opportunity. “At the end of the day,” says Ferrari, “I still believe that healthcare is an important component to have in an asset allocation model because you can’t get away from the fact that the population of the world is growing older faster than at any other point in time. And we need healthcare. We want the best devices and drugs, and to go to the best medical centers. This is not going to change."

“Be tenacious,” McGlynn advises medtech investors, because the industry is still healthy. “We continue to close a lot of early-stage rounds. This is a great age. There are some incredible ideas out there. I’ve seen that entrepreneurs need to be leaner. They’ve understood they have to move their products farther before they’re going to be eligible for venture financing. So I’m very bullish about the industry. For those who are tenacious and have a great idea, there’s going to be money.”

References

1. Medical Device User Fee Amendments of 2007 expire September 30, 2012. Congressional committees had planned to move legislation by April 2012 and have the new measures passed by both the Senate and House by early summer.

Bridge Design to lead all day workshop about Touchscreen Interfaces

Bill Evans  |  Aug 24, 2011  |   Comments (0)  |   Trackbacks (0)  |   Permalink

If you are just beginning to think about using a touchscreen or if you already started down the path and want expert guidance, then visit us at this year’s Design & Manufacturing Midwest 2011 Conference on September 22 in Chicago. My colleague Diana Greenberg who heads Bridge’s User Experience practice and I will be leading this session. In it you'll get to understand the most crucial aspects of what you'll need to know to make the right decisions about the technology, design and development issues of bringing this great user experience to your customers. 

Also speaking is Steve Wilcox, Founder and Principal of Design Science, a Bridge partner who has worked with us on several occasions assisting with the Human Factors aspects of UIs.  He is speaking about Fitting Touch Screens to Your Users.

Bridge is also pleased that several other leading experts are working with us to make this a very informative session – see the conference agenda here for more details and the other speakers. 

The session runs on Thursday, September 22nd from 9 a.m. to 4 p.m., with a 2-hour break for lunch and networking. Join your colleagues and register today to gain new insights and practical information you can immediately apply to your job responsibilities!

Register by August 26th to get the early bird discount.  Click here for more registration details. 



A recent touch screen interface for ICU blood glucose monitoring developed by Bridge with IntelliDx.




If you are interested to learn more about Bridge's approach in creating highly usable UIs prior to this workshop, see this article Bridge wrote that outlines our approach. We've refined our process quite a bit since writing this article in 2007, but it does explain the basics and has some great information on smoothing the path of how your UI will undergo scrutiny with the FDA.


 

Innovation in MedTech Companies

Matt Presta  |  May 11, 2011  |   Comments (0)  |   Trackbacks (0)  |   Permalink
Read the new article by Bill Evans in this month's MD&DI magazine called "Lost in Translation? Innovation in MedTech Companies, from Ideas to Execution."  

Read about it here.

The Greening of Medical Product Design

Bill Evans  |  Aug 01, 2008  |   Comments (0)  |   Trackbacks (0)  |   Permalink

This article was originally published in MDDI on August 2008.


OEMs should know how to make medical device products more sustainable.

The green writing is on the wall: it is time for medical manufacturers to consider the sustainability of their products, packaging, and production processes.  In the consumer world, Wal-Mart is undergoing a major effort to adopt sustainability and even hired the ex-head of the Sierra Club as a consultant on this topic. Clorox recently announced its Green Works line of greener household cleaning products.  Companies with a strong presence in the medical field like Kimberly-Clarkand Philips have long been addressing the problem.

This author’s interviews with medical product consumers around the country have revealed concerns about sustainability. Consumers consistently bring up the topics of global warming or green in discussions about new products that, as recently as two years ago, would have been solely focused on efficacy and usability.

Even if you are not doing something about getting greener, your customers are. Alegent Health, a company with nine hospitals and 8600 employees, has recently named a vice president of sustainability.  When faced with a choice of medical products of similar cost and efficacy, it is likely that customers will purchase the greener product, especially if manufacturers have added green to their brand attributes in a way that customers see has real meaning.

Sustainability broadly means considering the environmental effect of a product throughout its life cycle, not just in its creation and initial use. And it is a daunting topic for the uninitiated.  Although RoHS and other legislation in Europe have brought some sustainability issues to the forefront, it is understandable that many medical manufacturers have been reluctant to embrace sustainability. The device industry is notoriously slow to make changes. In addition, the industry is sometimes exempted from the legislative restrictions required in the consumer marketplace and is therefore less likely to pursue such change. Further, sustainability has an image of increasing costs.

The good news is that there is a lot of low-hanging sustainability fruit that can be harvested by applying common sense principles and a sustainability-conscious eye to the product life cycle.

This article presents practical advice to designers and manufacturing engineers about how to improve the sustainability of device products. Be prepared to besurprised, as have many in the consumer world—you might just find out that it makes good business sense too.

Start Here: Map the Product Life Cycle
Understanding how manufacturers can use sustainability requires mapping a product’slife cycle. This includes raw material extraction; all processing and manufacturing; actual use; and disposal, reuse, or recycling.

Creating a sustainable product is an attempt to reduce the environmental footprint at each stage with some kind of change. Changes do not have to be massive to have a positive effect. For instance, Philips Healthcare considers a product a Green Flagship if it achieves 10% improvement over its predecessor or competitor. A review of Philips products with such status indicates that most achieved improvements in the 25–35% range.

OEMs usually focus on improving efficacy and usability, and minimizing trauma and cost. Like these factors, sustainability has the biggest influence at a product’s conception.  Many sustainable qualities of a product are baked in during the innovation and design stage.  

For medical products, the business model is also important. For example, a one-time-use disposable consumes more resources than a reusable product. Of course there may be clinical, product, or sterility issues that require disposability. Because of such factors, the approaches to sustainability from the general consumer or industrial world do not always translate well to medical products.

Quantifying Design Alternatives
Once a specific device’s life cycle is understood, an OEM can begin identifying the places to lower its environmental impact. The team should quantify the effects of various choices.

One way of enumerating a particular design’s effect is to use software such as Life Cycle Assessment (LCA). This software draws on carefully researched databases, allowing manufacturers to estimate the effect of one type of plastic over another, the weight and material type of packaging, or shipping options.  Leaders in LCA software are European companies with products such as SimaPro and GaBi. 

Although large companies may already own such software or think nothing of purchasing it and training people on how to use it, the software may not be the right place for most device manufacturers to start.

Hans van der Wel, Philips Healthcare’s manager of ecodesign and sustainability, helps run its Green Flagship program. He says the best method for starting out is to “keep it simple. Start with a spreadsheet based on simple indicators. We call ours green focal areas [and] include qualities like the amount of materials, energy, and hazardous substances used.” He says it took Philips 10 years to get to its Green Flagships program.

Example: An RF Surgical Tool

An example product demonstrates how device designers might approach sustainability. A product system includes a disposable and an energy-supplying console.  The following section explores the effects of changing these system elements, which are typical to many medical products.

In evaluating the effect of the various components that make up the whole product, designers need to use real impact data. The LCA software makesfinding data easy. It is probably the best long-term tool, but it requires a commitment of money and training that might slow initial efforts. Alternatively, the Okala Guide is inexpensive ($12) and has a useful table of impact factors that covers common materials and processes. It is used in this example.  The Okala guide combined with a simple spreadsheet may be good tools to get started.

To make this example easy to understand and illustrative of the kinds of improvements possible, not every material or process is compared. In some places, system elements are combined and given overall numbers to ease the reading of the tables.

The analysis focuses on areas in which manufacturers can have the most influence.  In practice, when you consider the whole product, the actual impact reduction achieved might be lower than the numbers shown here. However, on an established product, an overall 20–30% reduction is relatively easy to achieve.

Product Description. A hypothetical radio-frequency (RF) tool for clamping and cauterizing surgical wounds is being considered for redesign. The company hopes to improve sustainability.  The product is a system consisting of a disposable handpiece and an RF energy generator and controller.

The Disposable Handpiece: Consists of a plastic-and-metal handle with integrated mechanisms that provide mechanical advantage to the surgeon’s grip during the procedure, and a wiring harness to connect to the console. The handle is currently single-use (all parts) and is contained in sterile packaging.  It is manufactured at one location but used in all major global markets.

RF Energy Generator and Controller: Consists of a piece of capital equipment that is a power and control source for the disposable. It is based on five-year old electronics and display technology, has no field-upgradable features, and is intended to last five years. The console is built into its own hospital cart.

Two levels of improvement are considered: first, a few options f or redesign of the disposable, and second, a redesign of the reusable energy-generating console. To begin, readers should understand the existing product’s ecological footprint to accurately compare new design approaches.

Calculating the Footprint.

Everything that is used to make, use, or dispose of a product is scored based on its environmental effect. This is calculated using a rating called impact factor.  Impact factor numbers have been gathered or researched and reduced to a standardized unit by an agency such as the makers of LCA software or compiled in resources such as the Okala guide used here. This factor is based on how the particular parameter is used in the product (e.g., per lb material, kWh of energy, tn/miles of transportation, etc.). Totaling the scores yields an overall product rating. In this example, units are in Okala milli points. Impact factor units must be the same for all contributors. Values from sources that do not share units cannot be mingled.

The RF device example looks at the effect for the entire life of the product—about five years. During this time a typical user buys one console and uses 10 disposables per week, yielding a use of 2600 disposables per console lifetime. This means that of the roughly 212,000 impact points, the 2600 disposables used over the product life contribute about 196,000 points. It is important for designers to consider the overall system usage, not just individual parts, in evaluating and comparing the various redesign choices. With this calculation in mind, consider the following possible changes to the hypothetical product.

Scenario 1—Make the Disposable Part Weigh Less (console unaffected).  This scenario simply considers using improved design optimization tools such as finite-element analysis (FEA) to reduce the material needed for both the plastic and metal components (without compromising function).

A slight weight reduction has various virtuous effects. Less material is used, which reduces environmental impact.  In addition, lower material cost helps offset the increased design and validation costs of a lighter handpiece.  Packaging can also get a little lighter to reduce shipping cost and impact.

A modest change to the product, requiring no major changes to the way it is made or used, yields a small but meaningful 6% reduction in impact over the product’s life.

Scenario 2—Make the Disposable Weigh Less and Enable the Wiring Harness to Be Reusable 20 Times. The development team notices that almost half of the disposable’s impact comes from the copper wiring in the leads that connect it to the console. The leads are redesigned to be sterilized and used 20 times instead of just once. The copper content remains the same, but the insulation needs to be beefed up to make the parts rugged enough to withstand reuse.  Also, now they will not be packed with every disposable but instead be shipped one set per box of 20 hand pieces. Overall, the product and packaging are lighter, further reducing impact score. A factor must be added for the sterilization by the hospital. 

Reusing the wiring harness has a very significant effect. Now the impact is reduced 44% overall from the original product. This redesign does, however, require a change in how the product is sold (box of 20 handpieces with just one wiring harness enclosed) and in how it fits into the hospital’s overall workflow. Hospitals must sterilize, manage, and inventory a wiring harness for 20 uses. But copper is also expensive, so now the cost to provide the function of 20 handpieces has decreased. Such savings could be passed on to users in exchange for the task of sterilization, without negatively affecting the manufacturer’s profit per handpiece. It is a balancing act, because the cost of sterilizing at the hospital may outweigh any savings.

Although the market may not yet be ready to make such a change in how it handles wiring harnesses, the example shows how such a change contributes to making the overall system green.  As some large hospital groups become serious about being more sustainable, they may be prepared to make these kinds of changes in the near future.

Scenario 3—Build on Scenario 2 by Redesigning Electronics and Choosing Lighter Materials for the Enclosure.  Now the development team turns its attention to the console and notices that the energy used while the machine is on (usually for a four-hour procedure) affects every disposable. Modern electronics are not only RoHS compliant, but also offer a more efficient package in terms of PCB size. Furthermore, new electronics consume half the energy of older electronics (due to improved sleep modes between uses during the procedure).  Now that the console is smaller, it can be built into a lighter, portable enclosure, rather than integrated into a heavy cart. Such changes have a significant effect on both disposable and capital system elements, and yield an overall 52% reduction.  Notice that if further changes are made to the console electronics to reduce copper wiring by 20–50% (perhaps by some novel pulsing technique or a change in the frequency of the RF), it would further improve the product’s impact score.

A simple spreadsheet scenario like the tables allows a team to see possibilitiesfor redesign. This is obviously a highly generalized example. Only your technical and marketing teams know where the opportunities lie for your specific product in its clinical efficacy and marketing acceptability.

The Disposable Matters More
In this example, it is assumed that 10 disposables are used per week per console—not an unreasonable assumption for this kind of surgical tool. As noted, this means that over a five-year design life, 2600 disposables are used.  Therefore, even a small improvement in the disposable has a magnified effect.  By contrast, if the design team halves the impact of the console it hardly reduces the system’s overall impact. Designers must consider the effect of the whole system’s use.

Although the case study shows that focusing the redesign effort on the disposable has the most affect on environment, there are still things the manufacturer can do to the reusable portion of the product that can further reduce its impact. In the example, 50% more efficient electronics in the RF energy generator lowered the energy portion of the product’s impact 2600 times because each use of the disposable cost 50% less energy.

Conclusion
This exercise shows how changes such as lowering energy use through a better sleep mode for the console can have a greener consequence than, say, using a lighter plastic on the enclosure.  It’s not always the obvious changes that have the most benefit, and unfortunately, finding the changes that have the greatest potential are not formulaic. Each product will have very different aspects that must be rethought.

Perhaps as an industry we need to reconsider what it means to be green.  As Wendy Jedlicka, a sustainable packaging expert, puts it, “The idea that you have to wholly embrace eco like a religion is shortsighted and frankly not sustainable. We need to get everybody doing a little bit of something to mitigate what we are doing right now; then we can keep improving.”


Reference
1. Philips Medical Green Flagships [online] (Amsterdam [cited 28 May, 2008]); available from Internet: www.medical.philips.com/main/company/sustainability/
green_flagships. 

Beyond Brainstorming Part 1

Bill Evans  |  Sep 10, 2004  |   Comments (0)  |   Trackbacks (0)  |   Permalink

This article was originally published in MDDI on September 2004.

How can product development be conducted more effectively to achieve success in the marketplace? Studies suggest that the leading cause of superiority is product uniqueness, which is most effectively implemented through the use of a high-quality process that defines product value.

Product value is defined in the earliest stages of new product development. These early stages are also when strategies are created to ensure that such value drives the design process. Paradoxically, they are also the least-expensive stages of development.  To achieve maximum product value and marketplace success, developers need to spend more time determining what specifically should be developed, and not just how to develop it.  A modest amount of targeted prep work can dramatically affect concept development activites, laying a foundation for products that offer meaningful advantages.

Most people recognize brainstorming as a bread-and-butter tool for generating innovative ideas. However, brainstorming means different things to different  people. Some believe that brainstorming is a waste of time or that it is politically motivated. When managers do decide to organize a brainstorming session, they often find little more than personal experience to use as guidance. How then does one learn to manage such specific efforts and ensure that the process generates effective concepts that will lead to a competitive product?

This article addresses the first two stages of concept development management, taking into account that brainstorming is only one part of a larger product  development process.  A subsequent article will explain the process of turning all the up-front work into a productive idea-generating session and concept deployment process.

An effective concept development process combines innovative approaches with simple analytical and research tools. It is ideal for any medical product  developers needing to revitalize a team’s creative abilities. Taking a more strategic approach that focuses on customer value and technical solution space, managers can improve the efficacy of brainstorming sessions and increase potential product success.

Power through Knowledge
Three variables influence brainstorming success. Thesevariables are: the nature of the problem, a group’s potential for creativity (this includes the facilitator), and a group’s understanding of the problem. A problem’s fundamentals are a given and cannot be influenced. The potential of a group can be orchestrated somewhat by choosing a good combination of participants and by having a skilled facilitator who can lead them in a favorable environment. But the most significant factor that can be influenced is the team’s understanding of the problem.

A common myth is that to inspire breakthrough thinking, one needs to wipe the slate clean, withholding a project’s background information from a group. Some think that keeping a brainstorming group in the dark will increase the group’s likelihood of pursuing novel solutions. Although including group members from outside the company can often break organizational inertia, depriving a team of fundamental information can stonewall innovation. Studies performed in the 1960s determined that more than 90% of patents solved problems with existing solutions. Current research supports this finding. Therefore, accepting the mantra that “all design is redesign” is crucial to successful ideation.

An informal study comparing the creative performance of well-briefed groups and naive ones also gives credence to this assertion. The unbriefed groups launched into a creative outpouring on how to design an energyefficient light bulb. The other groups first spent two hours reviewing samples of 30 different bulbs and evaluating their design issues. Both groups reported a significant number of ideas, but the ideas presented by briefed groups were of higher quality and contributed more to the bulb’s final design.

Brainstorming, a topic covered in the upcoming installment of this series, is essentially about making connections between existing ideas. Participants should be inundated with information and allowed to filter and evaluate this information according to their interests.  This way, they are more likely to develop new insights or interpretations of the given problem. Concept development should be considered as much a learning process as one for generating ideas.

Forming a Team for Innovation

The composition of an early-stage concept development team greatly affects the ideas that are generated and pursued. A team should include 8–12 participants.  Team hierarchy should be flat—a single experienced facilitator should establish an environment in which all contributors’ ideas are valued equally. Diversityis critical in assembling a brainstorming team. Having representatives from different fields, different sexes, and different levels of experience is obvious,but diversity of personality type and background is often more important. It can be highly profitable to involve people with broad nonprofessional interests,or a personal connection to the medical use of the device being developed.

Encourage participants to step outside their roles as experts and to think outside their disciplines. Everyone can be a designer; many innovative suggestions come from participants who are not used to creating product ideas.  Humor also breaks a lot of ice, so bring in someone who can precipitate laughter.  Temper narrowly focused specialists with some generalists too.

Incorporating outsiders in brainstorming sessions can present some challenges. For example, in a recent session for a sutureless anastamosis implant tool, a company invited two surgeons to participate in a brainstorming session. These experts attracted much of the attention of the group, turning the session into an educational question-and-answer meeting, and few ideas were actually generated.  Therefore, carefully consider the role of outsiders: are they contributing ideas or educating the team? Use their expertise specifically for its intended function. In the above example, the surgeons’ expertise might have been more appropriate for use in briefing sessions than brainstorming. Including outsiders is valuable, but such outsiders must be selected carefully.

Product Definition

Participants should understand the specific approach to concept development they will be using. One major challenge in concept development is identifying and understanding the problem.  This challenge makes product definition a critical phase of concept development.  It is the phase in which designers conduct research and analysis to identify and understand the basic design parameters and develop a value model. In this phase, designers should also provide a strategic basis for ideation and product improvements. A thorough product definition can determine the success of brainstorming.  After all, it’s difficult to solve a problem without first understanding it.

Many companies already use some definition tools, but perhaps not as strategically as they could use them.  For example, some teams focus their efforts and resources on the most complex, but not necessarily the most important, aspects of a design. Other teams spread themselves too thin trying to cover every part of a design. The sidebar “Product Definition Activities” describes ways to address project-relevant objectives.

It is helpful to view product definition as a filtering process. A team starts with potential access to vast amounts of relevant information, including research studies, individuals’ experience, and consumer data. It must distill the information down to the most important points using objective analytical methods. This filtered list then forms the basis for an intelligent design strategy, and focuses a team on critical and specific topics for ideation.

One or two designers can conduct the following activities over a 2–4- week period. These activities lead up to a presentation to an entire development team of 8–12 participants. Those conducting the up-front research and analysis are responsible for organizing all activities in the concept development project. However, their voices are equal to those of the rest of the group in the generation and selection of concepts.

Planning. In concept development, planning is the most important step for getting a team onboard in terms of developing a set of common expectations and priorities. Is the goal to minimize time to market? To advance the technology to a certain level, regardless of time? A team should develop, document, and formalize its priorities and its strategy for addressing trade-offs.


At this stage, a helpful activity is to poll participants to determine each person’s most important objectives. It is common for a group’s objectives to differ at the start. Presenting these differences to the entire team and pursuing a consensus is an important first step.  


Learning. It is essential to conduct research and present background information about the product, the market, the use setting, the user, and the manufacturing and operations issues.  An emphasis on benchmarking and observation is often overlooked, but can provide information that reveals an opportunity for a competitive edge.

Benchmarking is a powerful twopart tool to help understand competitors and customers. First, it can be used to formally evaluate and quantify product differences, both in technical metrics and customer-satisfaction levels.  Second, it provides a method to look beyond similar products and serves as a brainstorming event of its own. It enables a team to investigate new and exotic materials, manufacturing processes, and products from completely different industries. Benchmarking also enables a team to crosspollinate ideas from these other technologies or processes.  

Some teams buy product samples that might lead to ideas or provide inspiration.  It is essential to have samples available to dissect, reverse engineer, experiment with, and play with during the brainstorming sessions. A minimal investment at this stage can produce important ideas. For example, while developing an intraocular lensfolding tool, one team came across some  Chinese finger cuffs. The toy led to the development of a set of solutions based on contracting a membrane by pulling on it.  

Observational research is increasingly becoming the secret weapon of successful product designers. Seeing products used in the field is an invaluable experience. This observation affords a team the opportunity to recognize subtle issues and challenges that others have overlooked. With this insight, a team can develop a more meaningful appreciation of what customers want. To gain the most from this task, group members may need to think like cultural anthropologists, industrial engineers, or behavioral psychologists.  Observational research complements broader quantitative market surveys.  Demographic metrics alone often miss the subtleties of the user environment.  A connection with the design challenge can motivate a team to create improvements upon existing products.


Analysis. To begin systematically focusing on the scope of the project, it may be helpful to use what might be termed an analysis lite approach. The idea is to use many relevant analytical tools to dissect the problem, but to get the most out of them in the least amount of time. For example, quality function deployment (QFD) is a method for processing product information and generating outputs that drive product development. However, QFD can be an enormously time-consuming process and, if done poorly, may be of little value. But if a team focuses on only directly relevant QFD processes, the resulting data can be very helpful. By using selected QFD processes to record information and to strategically generate discussion, a team can develop a basic output on which to focus.

In a recent two-day session for a well-understood product, the team completed only the planning and requirements part of the QFD method.  But on a more technically challenging project, it focused also on the tools for identifying design interactions and for structuring technical benchmarking.

At a minimum, the preparatoryanalysis phase should include the following tasks:
• Identify the customer. This may not be as straightforward as it seems. It requires a team to map out the entire supply and value chain, identify the key players and their stakes, and assess how money and information flow through this system.  For example, financial management makes decisions on some hospital products, whereas clinician preferences may be more important for others. The model can be simplified for other definition activities.

• Generate a list of about a dozen fundamental customer requirements.  (Put aside the 50-page design requirement documents. They are often overly constraining and lead people to think in terms of features and metrics rather than the customer’s voice.) A team should rank or weight these fundamental  requirements to focus on brain-storming topics and to use later for concept evaluation.  This ranking activity should involve input and discussion from all disciplines.

• Develop a similarly weighted list of business filters that defines the constraints and opportunities related to objectives within the organization.  These could include the bill of materials (BOM) costs, development risk, process development, reimbursement, inventory control, and intellectual property.

• Identify technical objectives. They can be general or specific. Examples include increasing quality, making the product a specific length, decreasing mass, reducing the BOM cost, eliminating failure modes, or reducing assembly time.  The team should then rank the importance of the objectives.

• Conduct analyses specific to the problem. For example, on a cost reduction redesign, a team might run a design for assembly analysis that evaluates assembly-time improvement.  For emphasis on reliability, it might conduct a failure mode and effects analysis on similar or earlier products.  These weighted lists and analyses form the basis of a value model that will help focus ideation activities.

Briefing. One of the final steps in theproduct definition process requires coordinators to brief the entire team.  Those charged with conducting definition activities can then create a two hour presentation that educates, answers questions, incorporates guest specialists, and shows samples. Two key points are important at this stage.  First, the presentation should clearly focus on the design problem, not just impart a large amount of information. Second, it should be interactive.

Team discussions may be the most valuable aspect of the briefing process.  Afterward, participants should be able to easily express the design’s most important requirements and objectives. To avoid overwhelming participants, the briefing should take place at least one day before the brainstorming session.

Participants should be encouraged to start thinking of ideas before attending the brainstorming sessions. Independent ideation can often be more effective than group brainstorming.

Conclusion
The concept development process is an effective approach to engaging multiple functional groups within your organization as a single team with a common goal.  The initial investigation and product definition activities are critical to defining a value model that will guide the design process. Furthermore, these activities will help to motivate the team for subsequent stages by unifying them around a clear mission.

 The second installment of this article will cover the subsequent stages in concept development, namely ideation, concept selection, and refinement. The success of these stages in generating and deploying concepts to a competitive product is ultimately based on the team’s ability to leverage the knowledge and understanding they have developed in the initial stages.

Beyond Brainstorming Part 2

Bill Evans  |  Sep 09, 2004  |   Comments (0)  |   Trackbacks (0)  |   Permalink
Developing successful products starts with understanding customers and translating their voice into appropriate product ideas and solutions.  Brainstorming is a common ideation technique used to rapidly generate potential solutions.  However, managers often find little more to go on than personal experience to streamline the process and vague admonitions to get a great facilitator and pack a room with creative talent.

The first installment of this article discussed critical processes such as forming a team and defining product value. This article illustrates how to use this team insight to continue the process. Doing so includes formulating targeted questions, generating a multitude of ideas in a series of team brainstorming sessions, and then systematically synthesizing the best ideas into a series of system-level concepts. These concepts can then be tested by potential customers and iteratively refined and improved. This process will help discipline the design process early on, saving valuable time and money and mitigating risk over the entire development cycle of a new product.

Constructing a comprehensive model of customer value and clearly defining the solution space is a first critical stage of product development. If product definition is successful, then brainstorming happens quite naturally. It is a far more controllable and predictably successful process than many believe.  In fact, when a team comes out of product definition feeling like they are prepared for the next step, they can often reliably predict the number of ideas that will be generated in brainstorming sessions.

Idea Generation
The goal of concept generation is to produce a vast quantity of ideas virtually without regard to quality as long as there is a focused attempt to address the problem. Some people are uncomfortable with this so-called quantity over quality approach, and some research challenges it. However, although both dimensions are important, it is difficult to assess the quality of ideas during brainstorming. In addition, there are no specific cognitively based means of  trying to deliver higher-quality ideas other than censuring some of them, which should never be done during brainstorming. Finally, quantity is more important in terms of team interaction and enabling team members to build upon other people’s ideas.

To generate the necessary quantity of ideas, a team must take on a high level of intensity and perhaps even competitiveness.  Factors that help teams attain such intensity include experience with the proper timing, skilled facilitators, process, and of course, copious amounts of caffeine.

However, real stimulation cannot be sustained for long. Therefore, sessions should be kept short; in fact, they should be far shorter than most people believe. A total of about six half-hour sessions, each on a different topic, is recommended. Teams should have a five-minute break between each session and should never attend more than four sessions in a single day. It is helpful to set a goal of how many ideas the group will try to generate in each session; 40 ideas per half-hour is fairly attainable.


While it may seem contrary to popular belief, the attitude toward concept generation should be to be focused rather than unconstrained. Good facilitators manage a group attitude without trampling on its collective creativity.  It is helpful to consider the optimal creative mindset to be one that is defocused with heightened sensitivity.  Team members should focus on the problem or topic, free their minds to whatever conceptual associations they may make, but have the sensitivity to recognize connections between ideas that may lead to solutions.

To support this goal, the organizers should carefully craft a set of questions for each topic session. Each question should specifically address one goal or requirement arising from product definition, but should avoid implying certain types of solutions. One method to develop a system of such questions is to conduct functional decomposition, a process of breaking the problem down into a series of simpler subproblems. The question creation task is far more challenging than it seems, and it requires practice, thought, and feedback from others.

Finally, sharing and documenting ideas is crucial to maintaining inertia and building upon those ideas. It also provides an efficient way to archive ideas sothey can be reviewed later in the process.

The documentation method suggested here is simple and can be more effective than using whiteboards or flip charts. This approach also remedies the so-called production-blocking effect in which idea generation is hindered as people must wait their turn to record or announce their idea.

A facilitator should bring a few hundred sheets of letter-size paper, preprinted with a generic format, as the medium to record note taking and sketching.  Team members should be encouraged to note their ideas and to draw large and colorful pictures, which facilitates moreeffective visual communication. Sketches should be briefly shown to the group to stimulate others to build on the ideas and posted on a wall in the work area.  At the end of the session, the sheets can be collected, scanned, and indexed in an HTML Idea Log, which creates a record for future investigations and IP protection purposes.

Concept Deployment
Once the stress of brainstorming sessions is over, the real work begins. The intense idea-generation process can be fun and invigorating. However, making sense of these ideas and refining them into realistic high-value solutions is a difficult task. Team members should break for a few days to distance themselves from the stress and any bias or ownership issues from the brainstorming sessions. The iterative selection and refinement process are the next steps.  

Screening.

Reviewing all of the ideas gives team facilitators a sense of what they have to work with. A short meeting (1–2 hours) works well to screen the ideas. This meeting should have no more than three participants. This step is a fast-paced, low-stress way to skim off the good, the bad, and the ugly. One screening method uses three bins labeled something like “Hot Idea,” “Maybe,” and “Back Burner.” Led by one person, the group can rapidly distribute the ideas into the bins. If an idea is obviously hot, give it the go; if it is irrelevant or impractical, trash it; and if there is disagreement or unclear potential,put it in the middle. This activity is not the time for a lengthy debate; everyone involved should recognize that.


Synthesis. Concept synthesis is perhaps the most challenging and crucial part of the entire concept development process. It is fundamentally a subjective and organic process that involves less-structured decision making. Two or three designers should start with the “Hot Idea” bin and work toward generating a set of integrated system-level concepts.  Single ideas are usually meaningless by themselves; they need to adhere logically to other ideas to form solutions that can be evaluated reasonably.

By developing a structural or functional breakdown of solutions, team members can select and combine ideas from each category. It may also be helpful to develop themes by envisioning system personalities and then combine ideas that work well with that specified set of characteristics. Often, such themes will be apparent.

With either method, it is important to group similar ideas and arrange them using a deliberate system. For example, one team held brainstorming sessions for a diabetes infusion set on various topics. Afterward, the team members pieced together ideas from those topics to form a set of six distinctly differentproduct systems. For example, one system embodied the notion of slimness, one was meant to appeal to children, one was based on modular components, and one facilitated the invention of a new insertion tool. 

It is important that all of the potential systems represent different concepts.  Some should be radical and some conservative; some simple and some complex. The ideas that are selected and combined should:

• Physically or functionally work well together.
• Balance each other’s weaknesses.
• Resolve design contradictions.
• Maximize product value as it was defined during product definition.
• Minimize complexity, cost, and risk.

This task fundamentally requires the ideas to be shuffled around. It’s helpful to find a big table or floor space, and start pushing paper. At this stage, it is also important to revisit the “Maybe” stack to see whether those ideas have since developed any potential.

Concept Evaluation and Selection. This is the time to get critical. The selection phase presents an ideal opportunity to reassemble the entire team for serious discussion.

A simple selection method, such as Pugh’s Method, can stimulate and organize discussion and debate. Pugh’s method is an iterative technique in which candidate concepts are compared with each other on a number of different dimensions.

The chosen selection method should leverage the customer requirements and business filters weightings that were developed during the product definition stage described in Part I of this article. Again, the discussion, rather than the numbers in the matrix, is most important. At this stage, emphasis should be placed more heavily on customer requirements than might realistically be the case. The team should not overly scrutinize each system to determine an exact numerical superiority between systems. Rather, the focus of this session should be to narrow the scope, either by eliminating ideas or combining and reconfiguring them.

Concept Refinement. Refinement and evaluation go hand-in-hand, and often these steps are iterated multiple times to move ideas closer to a more promising set of concepts. The goal is not to lay out or engineer the systems, but rather to develop a greater understanding of their nature, potential, and value.

Activities might include drawing detailed sketches (but no CAD yet), adding or removing features or functionality, researching patents, consulting with specialists, establishing significant economic data, and conducting focus groups. Very simple prototypes that demonstrate specific critical functions or evaluate product scale or ergonomics may be appropriate.

This refinement is an interdisciplinary step, so participation from marketing, manufacturing, operations, finance, and design is important during the process. Concept refinement also requires smaller working meetings with a greater focus on quality and specifics than the original large brainstorming sessions.

Concept Testing. Once the team has a limited group of refined system solutions, it’s time to return to where the entire concept development process starts: the customer. Testing marketplace acceptance of product concepts is vital to increasing the likelihood of success.  Such testing typically takes the form of consumer interviews or focus groups.

To make this effort successful, it is important to plan an easily repeatable test. It is also essential to engage an experienced and effective focus group facilitator and to work with diverse and representative subject groups.  Participants in development activities should not interact directly with interview subjects or focus groups.

Such investigations typically start with presenting study participants with concept-level sketches or storyboards for initial feedback on the ideas and not their physical embodiments. Only after this high-level evaluation takes place should a study participant see specific concept prototypes or renderings.

It is essential that controls be applied to the process. For example, all prototypes should reflect the same level of craft, and factors that are not being investigated (e.g., color, material, etc.) should be constant across concepts. This control reduces subjective bias variability.  Also, an experienced groupleader or interviewer should monitor discussion to ascertain valuable feedback and prevent runaway focus groups. The results of such studies can be used to select and further refine concepts.

Concept testing does not need to be an expensive, large-scale quantitative study. If the budget is tight, the marketing team could show the ideas to potential customers in a few diverse geographic regions.

Conclusion
The concept development process engages multiple functional groups within an organization as a single team with the common goal of exciting customers with new and valuable products.  This first phase of product development is crucial not only to increasing the likelihood of product success in the marketplace, but also to motivating the team for the subsequent phases, as this process ensures that ideas are ultimately envisioned by the team and not only individuals.

Using cutting-edge technology, engineering reliable products, designing influential advertising, and presenting trendy styling can all play a critical role in marketplace success. However, all too often product failure happens because excessive time and resources are spent on these activities while failing to commit sufficient effort to understanding core product value and determining how to deliver it. Following the process proposed in this article can help lead an organization to a more successful understanding of its own processes and products, and how it provides value to its customers.

Faster, Cheaper, Better Products?

Bill Evans  |  Jan 10, 2004  |   Comments (0)  |   Trackbacks (0)  |   Permalink
By Bill Evans and Lisa Scheinkopf

Tips and tricks from insiders for freeing the product development logjam.

When you started your career in product development, every hurdle you encountered on the path to shipping a product probably seemed new and unique to that project. But as you advanced, you quickly learned that the same problems tend to rear their ugly heads time after time, even across companies. Wouldn’t it be great to access some of the collective experience of product developers throughout the industry? A practical workshop session at a recent Medical Device & Manufacturing conference did just that. The workshop, “Obstacles to Streamlining Your Product Development Process,” culled the experiences of about 20 designers, project managers, and engineers to produce a list of the most vexing problems that were preventing them from getting their work done efficiently. In the process of creating this list, the participants also shared some hard-won management techniques to overcome these obstacles.

The concerns of the group generally spoke to three distinct problems:
• Failure to adequately define a product before initiating the design process.
• A lack of resources to do the job in the desired time.
• A corporate culture and leadership that were not supportive of the new product development process.

What follows is an exposé of these issues and some practical insights into techniques that have worked in helping break the product development logjam.  We’ve also included some advice on what doesn’t work.


Improving Product Definition

From this workshop group’s point of view, product definition falls into two distinct steps. The first is the gathering and documenting of the requirements.  The group expressed frustration that, in general, they are often insufficiently informed to their potential end-users’ needs and wants.  When data are presented to them, they are ambiguous, badly organized, poorly communicated, or all three. The second step of product definition concerns gathering user feedback once the product development process has begun.  The group said they believe customer feedback is not done often enough, and, when it is done, it lacks consistency and is poorly communicated back to the project team. 

These types of issues can result in a product that seriously fails to address its market, or a process that wastes resources and time.  The group had some positive ideas about how to rectify these problems.

Spend Time with Your End-User. Although large-scale market research surveys collect plenty of data, they don’t fulfill a very important need—to directly connect the project team to the user and the environment in which the user works. To that end, the technical personnel who design a product should be part of the team who observes the user environment and discusses product ideas with real users in informal interviews. By doing so, the technical team will not only be better informed, but more motivated to solve the problems that have now become “personalized.” Designers who visit end-users in the clinical environment can also bring back vital photos, sound bites, and samples to enrich the explanations in the specification documents that are passed to upper management for sign-off.

Workshop participants noted that the further down the organizational hierarchy this market connection is pushed, the more successful the final products seem to be. Of course, not all product definition should be left to the “techies,” but it helps product development when they play a role and meet their future customers. Just beware of the “one-dog” clinical study problem, where generalizations are made as a result of feedback from very few end-users. Make sure that a good representative sample of potential customers is surveyed.  Integrating the results of a larger-scale marketing driven quantitative survey with a few site visits by technical personnel can be a powerful combination.

Watch Out for Unwieldy Customer Requirements Documents.

It is unlikely that customers will consider every product feature before making a buying decision.  What will be your product’s big selling points? Define them early, then check with the market by showing customers simple mockups or cartoon storyboards. Conference participants suggested prioritizing features into simple classifications, such as “must have,” “nice to have,” and “acceptable.”

As the project progresses, keep reminding the development team of the top customer requirements, and use them to judge the product’s progress. They can also be used to help judge the value of competing solutions to product development setbacks.

Product Definition during the Development Process.  The key to gathering successful feedback during product development is to prototype early, appropriately, and often.  Use the most suitable techniques for where you are in the project, and seek feedback as often as possible. For instance, instead of waiting until the CAD model is built, consider making an informal presentation to customers. Show them preliminary sketches, storyboards, or simple hand-made foam models. At this point, pictures and models are worth a thousand words. The workshop group supported the idea of using every trick in the book to get ideas out to customers as early as possible to validate the designs, noting that presentation techniques, such as simple animations, are now easier to create for product demonstrations. Once customer feedback is gathered, it must be presented to the whole team in a timely fashion.

How Not to Define Your Product. The workshop group recounted some war stories of what did not work for product definition. Developing the product requirements while designing the product had proved problematic, as had trying to predict customers’ needs instead of asking customers what they wanted. Participants also reported that when the various subdisciplines of the project team tried to gather data in isolation of the others, poor product definition 
was often a consequence. And, of course, the group noted cases of “analysis paralysis”: too much data, poorly organized and presented to a large, unwieldy project team who did not have good tools for analysis. Such situations can lead to unwillingness to make the timely decisions necessary to make the product launch date. Fear of revealing ideas early was also cited as a cause of delay, as the potential users do not get a chance to nip bad ideas in the bud early in the design phase.

Managing Resources for Timeliness

If you have never heard the phrase, “We could do it if only we had more money/people/time,” then you are not—nor have you spent time with—a manager or engineer responsible for product development.  We spent a half-day with this workshop group at the conference, and, as one might predict, resourcing was brought up as a major impediment to developing new medical devices while meeting business goals.

Something’s Got to Give  The three-way tug-of-war inherent in the product development world, often referred to as the “triple constraint,” takes place among the competing demands of quality, cost, and time. 

Quality also refers to scope. In our experience, discrepancies often occur in the way that management, customers, and engineers define quality for a given product. For instance, if a “nice to have” feature is dropped because of cost or deadline constraints, engineers often perceive that the product’s quality has been compromised.

Cost relates directly to the resources made available for the project in the forms of money, people, technology, materials, and outsourcing. 

Time seems always to be in short supply. Projects start too late to meet their set completion dates. The pressure can come from needing to have a product ready for an annual trade show, from the presence of a competitor lurking nearby, from a customer who requires delivery by a certain time, or from a management team whose annual bonus is at risk.  The old adage “time is money”is evident when it comes to developing a product.

Conventional wisdom claims it is always possible to meet two of the three demands but generally impossible to meet all three. And, in fact, workshop participants said, “We typically do not get enough R&D time to develop a refined product,” and “Funding resources are limited: scaling and objectives need careful clarification.” In other words, “Unless you give us more time, we cannot achieve desired quality,” and “Limited money means limited quality, or scope.”

The group identified several resourcing solutions that have worked for their companies, as well as a few that haven’t. In addition to providing these solutions, it is important to identify the assumptions that make the successful solutions viable, and those that fail, unworkable.

Which Is Most Important: Faster, Cheaper, or Better? If you can’t have all three, then which are most important? The solutions that translate into highly competitive, successful product launches are those that place time and quality at the top of the list (see Figure 2). The companies that do so recognize that being first to market means more than saving a few pennies or even tens of thousands of dollars. These are not firms that are putting inventory into their pipelines too early, or starting more projects than they have the resources to handle. Rather, they are companies that invest in the capacity required to develop and launch high-quality products fast.

Teams behind successful product launches also understand that uncertainty and variability are inherent in a product development environment. They make sure their plans do not commit more than 70% of their capacity and that those plans utilize time buffers. 

It is wise to identify tasks and parts that are high risk and make explicit contingency plans just in case the worst scenario happens. This includes maintaining a list of on-call outside resources. Ongoing communication with these contractors helps them to anticipate what assignments may be coming and prepare to allocate the resources necessary to perform for the work.

Finally, learn from past projects. Put in place an auditing system so that resource needs can be forecast clearly and improvement projects can be targeted to those tasks, parts, and resources that are most variable or that will require the most time.

Resourcing: Taking Variability into Account. One comment made about resourcing during the workshop was this: “On paper [a resource plan often] looks fine, when in reality it’s not—for instance, allocating 20% of someone’s time as a resource.” Another was, “Resource allocation is good for the long term, but it doesn’t mean we get things when we need them.”

These statements illustrate what happens when organizations fail to take variability into account. Developing—and attempting to control—project plans that assume infinite resources and specific start/stop times for tasks will likely result in unmet goals. The same can be said of plans started regardless of the capacity requirements placed by other projects, and plans that have not strategically provided for variability.

Nurturing a Supportive Corporate Culture and Leadership Style
Show Me How You’ll Measure Me, and Watch How I’ll Behave. The effects of corporate culture and leadership style on an organization’s ability to achieve successful product launches constituted the third major focus of the workshop discussion. One common perception expressed by the workshop participants is that many people resist new approaches or ideas. Another is that senior staff do not follow through on their commitments. Accountability seemed to be the word of the day. Participants tended to believe that “if only those senior staff members were held accountable, all would be well in our product development world.”

Nurturing the culture seems easy if one assumes that the organization is made up of adults who can and should be trusted and respected. Good communication and information flow are essential. And for those things, you need trust and respect. It should be noted that team members and managers need to communicate in more ways than by e-mail alone! Believe it or not, the statement at the top of the workshop participants’ “doesn’t work” list was “e-mail hell.”

Take Risks and Find Errors Quickly. The wise advice not to punish people for taking risks and making mistakes goes hand in hand with encouraging cross-functional team input and buy-in to the project plan. When the whole team offers input, more risks can be identified up front, more assumptions can be examined, and, quite often, alternative solutions that reduce risk can be found. These methods will work best in an environment in which all assumptions are
considered challengable.

In such an environment, real core needs are identified. For instance, a visual prototype may be acceptable for the investor review coming up in three months,but a working prototype will be needed for the trade show that’s six months away. When project plans are developed, real communication should take place between the project manager and senior management regarding any trade-off issues. Free-flowing communication is preferable to the typical “I need more time or resources” requests by the project manager being countered with the typical “We don’t have more time or more money, but make it happen anyway” response by senior management.

Don’t cross your fingers and anticipate lots of overtime and weekend work to make deadlines. Use the planning tools available in numerous software packages—in conjunction with the tool you’ve got between your ears. Share the results with the team leadership to help them juggle resource and schedule commitments. And when a project must be stopped, communication should flow to those people who have worked on it, so that they can understand the business reasons that called for pulling the plug.

Enlist an Experienced Project Leader.  The vast majority of the workshop group said that one of the most important requirements for a successful product is a single, experienced project leader. You need someone who understands the product, the customer, and the organization. This individual should know how to make things happen, smooth ruffled feathers, and see the big picture as well as the details.

This leader must be able to drum up creative solutions and distinguish “noise” from real problems. Not only should every project have such a leader, but every leader should be actively mentoring at least one team member to take the leadership role on the next project. Companies that are aware of the importance of strong leadership and consciously nurturing potential new managers are not only better places to work—they tend to create more successful 
products as well.

Finally, the measures that are used to judge whether individuals and teams are doing a good job must be in alignment with the overall project plan. As an example, if project tasks are to move from one group to the next without stopping, then don’t measure the groups on “task due dates,” and don’t treat the task estimation process like a typical budget negotiation.  Instead, measure the groups on achievements such as project success, project innovation, and development of the knowledge and skills needed by the organization.

The Common Threads of Success

It is clear, based on the feedback from this group of product developers, that team members are not alone in the typical issues they face when charged with bringing a new product to market successfully. The keys to success in product development are similar to those of the other great challenges in life, such as marriage or parenting. They are:

• Communication.
• Leadership.
• Monitoring what works and what doesn’t.
• Taking risks and learning from mistakes.

Despite having about 50 years’ collective project experience, one of us from a technical product design background and the other from a business-process design background, we both learned new things from this lively group of workshop participants. We expect to continue learning. Perhaps project managers should be even more conscientious about sharing their experiences—warts and all—with their peer groups. We know that the ever-changing world will never let us rest, and we’ll finish this next project and then turn around and do another one—only better next time. 

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