What is Lean Product Development? (Part II)

In my last article the high level goal of lean product development was established as follows:

Develop products that maximize customer value and minimize product cost,  in the least amount of time, and at the least amount of product development cost.

Let’s analyze this goal statement and establish some high-level objectives.

Customer Value – understand customer value, and how product value can be maximized through improved product performance or features.  Maximize value and price your product accordingly.

Minimize Product Cost – optimize the design to ensure product cost is minimized while all requirements are met (includes minimizing product support costs).

Developed In the Least Amount of Time – minimize or eliminate resource downtime and bottlenecks, and minimize rework in the development process.  Key considerations here are effective resource management and level-loading the organization.  Meanwhile, risk of design rework can be mitigated through formal reviews with cross-functional teams.

Least Amount of Product Development Cost – use fewer product development resources, or lower-cost resources.  Also, maximize the use and re-use of artifacts.  (Design re-use, design, simulation, and test software tools are a valid way to reduce product development cost, but they are product specific and therefore out-of-scope for this process-focused article.)

If you’re developing several products, we’ll want to select “the right” projects (projects with the most financial benefit).  Financial metrics (such as net present value, internal rate of return and/or return on engineering) can be used to perform ongoing monitoring to ensure the project (or projects) continue to make financial sense.

Some simple high-level objectives are therefore:

• Better understand the customer (maximize customer value)
• Do the right projects (product, project and portfolio value analysis)
• Do projects right (minimize waste and rework)
• Level load the organization (minimize bottlenecks and resource constraints)
• Create and re-use artifacts (standardize and sustain best practices)

While these objectives are lean principled, they are somewhat macro-level and perhaps oriented toward medium-large organizations with several projects and skill sets.  (A smaller organization may focus on a smaller subset of these objectives.)

Note that an important benefit in describing these objectives is they enable a strategy depending on your business need(s).  In the next articles we’ll cover how to turn strategy into execution (ie. how these objectives can be achieved).