2007 PDMA Visions June

June 2007 VOL. XXXI nO. 2

Hyundai’s “Touch the Market”

ALSO InSIDe: • UK/Ireland• Launch Architects • Chinese Auto Industry • Lean Product Development

Insights into Innovation™

V I S I O N S

Henry Chesbrough discusses Open Business Models

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Visions is published four times a year, in March, June, September, and December, by the Product Development and Management Association (PDMA), 15000 Commerce Parkway, Suite C, Mount Laurel, NJ 08054. Each article reflects the expertise of the individual author, not PDMA itself. To become a member, contact us at 1-800-232-5241 or by E-mail at [email protected]. Copyright 2007 © PDMA. All rights reserved. No part of this publication may be reproduced by any means, or transmitted, or translated into machine language without the written permission of the publisher, PDMA.

up Front4 From the editor of Visions April Klimley

5 Letter from the PDMA President and Chairman Hamsa Thota

5 news from the PDMA executive Director’s Office Robin Karol

6 LAUNCH PAD: Who will you designate as “Launch Architect”? Mark A. Hart

To increase the effectiveness of future launches, Visions Launch Editor Mark Hart introduces the concept of a “launch architect.”

8 IN FOCUS: Comprehending innovation tools gregory githens

Greg Githens explains how innovators can make three tools more ef-fective; they are sWiFT, RAiD, and FAME.

10 VIEWPOINT: One more word on ethnography gerry Katz

Gerry Katz replies to Anne orban’s March 2007 rebuttal—continuing the debate over the proper use of ethnographic research techniques.

JUNE 2007 VOL. XXXi NO. 2

Overview of Lean Product Development p. 11

V I S I O N SInsights into Innovation™

nPD Trends/Practices 11 What is “lean” about product development? Katherine Radeka and

Tricia Sutton

This article by Katherine Radeka and Tricia sutton describes the variety of approaches to Lean Product Development and explains how these principles place customer value at the center of product development.

16 COVER STORY: Hyundai uses “Touch the Market” to create clarity in product concepts Heather Kluter and Doug Mottram

in this article, Heather Kluter explains how Hyundai has used its own customer-centric research process, called “Touch the Market” to develop the second generation santa Fe, launched in 2007

19 PDMA Conference Calendar

20 From Open Innovation to Open Business Models: An interview with Chesbrough Henry Chesbrough interviewed by Michael Docherty

Visions open innovation Editor Michael Docherty interviews Henry Chesbrough, the leading authority on open innovation, about the ideas in his new book, Open Business Models: How to Thrive in the New innovation Landscape (Harvard Business school Press, 2006)

22 Arizona Chapter conference focuses on sustainability Don Hardenbrook

in this Arizona Chapter report, Don Hardenbrook provides the high-lights of a regional conference on green product development.

Global news24 Report from China: Wuhan Conference examines the need for

innovation in China’s automotive industry Raja irfan Sabir

Raja irfan sabir reports on the December 2006 conference on the automotive industry held in Wuhan, China.

26 Spotlight on UK/Ireland: PDMA affiliate holds workshop on creativity in product development Pammi Sinha and Tricia Sutton

Pammi sinha and Visions Chapter spotlight Editor Tricia sutton review the findings of recent research on creativity presented at a creativity workshop held by PDMA’s UK/ireland affiliate.

PDMA news 28 PDMA Global Innovation Thought Leader Panel presents

recommendations Brian Christian and Hamsa Thota

PDMA has created a special panel of thought leaders to help it in its objective of “Connecting innovators Worldwide.”

�1 From Blogs to Books: Two resources for nPD Professionals Adam Hansen

�� From the Editor of JPIM: A restropecitve of The Journal of Product Innovation Management (JPIM) Anthony Di Benedetto

�� Classifieds

�4 Visions Information

�4 2007-2008 Visions editorial Calendar

�5 Listing of PDMA Chapters and Affiliates

China automotive conference in Wuhan p. 24

Chesbrough on Open Business Models p. 20

Cover story: Hyundai uses “Touch the Market” p. 16

4 JUNE 2007 PDMA Visions MAgAziNE4

editor-in-ChiefApril W. KlimleyPhone: [email protected]

Contributing Senior editorsGreg Githens, [email protected]

Gerry Katz, [email protected]

Specialty editorsCertificationKen Westray, [email protected]

Chapters and AffiliatesTricia Sutton, [email protected]

From Blogs to BooksAdam Hansen, [email protected]

Launch PadMark Hart, [email protected]

Open InnovationMichael Docherty, [email protected]

TechnologyEd Crowley, [email protected]

CopyeditorAndrea Herbert

Visions Advisory BoardMark Deck / Bob Gill / Michael MenkeChris Miller / Steve Uban

AdvertisingRoger StevensPhone: [email protected]

Ms. Henry Van, PDMAPhone: 1-800-232-5241 [email protected]

SubscriptionsBob Fogle, [email protected]$85/year U.S., $125 abroad; Information on page 34

Online Visions Available through the PDMA Web site, www.pdma.org

Visions magazine keeps members on top of trends and developments in the New Product Development world and the latest thinking of product development and innovation lead-ers. It is published quarterly by the Product Development and Management Association (PDMA). Subscriptions included in PDMA membership package; or available at $85 per year in the United States or $125 abroad.

Visions welcomes articles on Product Devel-opment and Management. Articles for the next issue of Visions (September 2007) are due July 16, 2007. Please submit queries to the Editor, April W. Klimley, by E-mail or phone.

From the Editor of Visions

The term “innovation” seems to be every-where. You can’t pick up a copy of Business Week or change televisions stations without

seeing companies like Accenture or even British Petroleum touting “innovation” as the answer to everything.

From the practitioner point of view, these broad references can be very irritating. They are confusing, too. They do not hinge on one agreed-upon definition. We all know that innovation is certainly not simply creativity, invention, or process; nor is it synonymous with New Product Development (NPD), although some people use it that way these days.

You’ll find two definitions of innovation in the box on this page. On Focus editor Greg Githens helped me find them, but I’d like to know your thoughts on the subject. Please email me your thinking on this term or a discussion of this debate. After all, that’s part of what the Product Development and Management Association (PDMA) is all about: developing consensus on a body of knowledge on emerging and/or changing concepts. Maybe we can solve this challenge, or at least clarify it. ([email protected]).

The popularity of this term innovation—what-ever it really means—has reminded us at Visions that we should be pushing the envelope—that is, broadening our own “vision” of the NPD field. So in this issue, you’ll see us focusing on several new areas. One of these is lean product development, a technique being used in many companies now, at times with a lot of confusion. This technique is very critical for innovators today, since many are under a double whammy. They are being asked to innovate continuously, but at the same time to spend less money at that activity than before. This article may help you as a practitioner to achieve both goals, or at least to reach for an approach that can help you do that.

We also offer you an informative interview with open innovation guru Henry Chesbrough, from our Open Innovation Editor Mike Docherty. And we bring you an excellent overview of what’s going on in green product development, a write-up of the Arizona Chapter’s spring sustain-ability conference from Don Hardenbrook. Since green product development has moved to center stage very quickly, we will continue to bring you more and deeper coverage of this subject.

April W. Klimley, Editor-in-Chief, Visions ([email protected])JUNE 2007 VOL. XXXI NO. 2

Insights into Innovation™

V I S I O N S

You’ll also find another installment of the Katz–Orban debate over ethnography research in this issue. And coincidentally we have an excellent complementary case history on this technique: How Hyundai created a process called Touch the Market (TTM) that used this type of research to develop the concept for its second generation 2007 Santa Fe. TTM was so successful that it is now being used at Hyundai to develop other product concepts.

You will also find several articles on new directions at PDMA itself: reports from both the Executive Director and the President and Chairman of PDMA, as well as an article on recommendations from the new PDMA Global Innovation Thought Leader Panel. These ar-ticles may spur your own thinking on how you can participate more fully in PDMA chapter or national activities.

Of course, one way to take part is by writing articles for Visions; or volunteering to be one of our sub-editors. Please feel free to give me a call about this at any time. We are always looking for more talent to help us stay on top of the product development field.

April Klimley, Visions Editor-in-Chief28 Riverside Ave. Ste. 6HRed Bank, N.J. 07701May 3, 2007

4 JUNE 2007

April W. Klimley

up Front

What is “Innovation?”

“A new idea, method, or device. The act of creat-ing a new product or process. The act includes invention as well, as the work required to bring an idea or concept into final form.”

—GlossaryPDMA Toolbook 11

“An idea, practice, or object that is perceived as new by an individual or other unit of adoption.”

—Everett M. Rogers2

endnotes1. Belliveau, Paul, Abbie Griffin and Steve Somermeyer, Editors, PDMA Toolbook 1, (Wiley & Sons, 2002) 2. Rogers, Everett M., Diffusion of Innovation, 4th Ed. (The Free Press , 1995)

5JUNE 2007PDMA Visions MAgAziNE

PDMA Update

During the past two years I have written to you about how the Board of the Product Development and Manage-

ment Association (PDMA), and our staff, have been reorganizing the structure of the association and planning for the future—a more global, proactive PDMA. In this letter, I’d like to describe the results of our work.

But first, let me recognize some of the volunteer leaders who made this transformation possible. They include Past President Bob Gill and Board Member Bob Johnston, who initiated PDMA’s journey with work on strategic frontiers in 2003; K.T. Connor for her leadership on the Governance Committee; and the members of our Global Innovation Thought Leader Panel, who have continued this tradition. (See pages 28 and 29 for details.)

Reaffirmation of volunteer leadershipSo, what have we achieved? We are successfully navigating a

major organizational and administrative transition in support of creation of a more global PDMA; we have reaffirmed the primacy of our volunteer leadership; and, in our maiden voyage under the new bylaws and governance, we have created three new commit-tees: Strategic, Operations, and Executive.

With this new structure in place, we have been able to link our Board-set strategy and priorities much more successfully with day-to-day operations and activities. For instance, we have expanded our number of international affiliates through an ini-tiative spearheaded by PDMA Executive Director Robin Karol; we refreshed our brand with a new logo and tagline under the leadership of Mark Adkins, VP Marketing; and we approved a new technology platform for the entire organization, through an initiative led by Chicago Chapter President Scott Miller.

These examples confirm the primacy of our volunteer Board in setting strategy and the ability we now have to achieve results based on that strategy. Looking ahead, we plan to get even closer to the needs of our members and others in the field of New Product Development through a new Voice of the Customer Study. We will use that information to help us set the next generation of our strategy through 2012.

I am very proud of these achievements, as well as the countless volunteer leaders who contributed to them. Let me thank each and every one of you; your leadership has ensured a bright future for a much more global PDMA.

Hamsa ThotaPDMA President and ChairmanApril 14, 2007

Hamsa Thota, PDMA President and Chairman and President of Innovation Business Development ([email protected])

Hamsa Thota

Letter from the PDMA President and ChairmanLeading the way toward creation of a 2012 strategic roadmap for PDMA

News from the Executive Director’s Office

In this letter, I’d like to report to you on two important initiatives that have paral-leled PDMA’s recent global and domestic growth. In March, we launched a new co-sponsored conference on “Service Innova-tion.” It was held in San Diego, Calif., and co-sponsored with the IIR. The conference

was well attended and very exciting; and it spurred the creation of a new Service Innovation Network. We all should keep an eye on this exciting new area of growth.

Over the past year, we also expanded our administrative capa-bilities substantially. PDMA has been built on the work of our dedicated volunteers, and it thrives on a culture of volunteerism. However, we needed additional professional support behind the leadership of our volunteers in order to implement their ideas and strategy. We have built a strong, energetic team to support our incredible volunteer community at our headquarters location in Mount Laurel, N.J., just a short ride from the Philadelphia airport.

We have added full-time marketing support, plus a specialist in conferences. And we are working on a new information technol-ogy system for the organization. All this has enabled us to have a stronger presence at each of our co-sponsored conferences, as well as additional marketing materials to display there and at the meetings held by our Chapters. I look forward to reporting to you on further advances in the interests of implementing the strategy set by our volunteer leadership and community.

Robin KarolPDMA Executive [email protected] 19, 2007

Robin Karol

PDMA Governance Committee

• K.T. Connor, Center for Applied AxioMetrics (Chair)• Cecil Chappelow, PolyOne• Tom Hustad, Indiana University• Bob Johnston, Visterra Group • Rich Notargiacomo, Kodak• Cheryl Perkins, Innovation Edge, LLC• Ira Uslander, Northwestern University • Robin Karol, PDMA Executive Director (Ex-officio)

6 JUNE 2007 PDMA Visions MAgAziNE

Frank Lloyd Wright was one of the most influential construc-tion industry architects of the 20th century. He is noted for designing structures such as Fallingwater (originally a private

residence) and the Guggenheim Museum. A talented architect like Wright functions to transform the client’s generic desire of “I want a nice building” into a marvelous result that creates specific user experiences and provides the high-level view of the builder’s requirements.

To arrive at an approved design, Wright’s team engaged in many discussions with the client before construction began. Dur-ing construction, contractors made enhancements; but Wright’s skillful design provided guidance for everyone contributing to the effort. In contrast, imagine building a house without the services of an architect. The resulting house would include the items on a standard checklist such as walls, windows, and doors, but the house would be inferior.

Launch plan developmentAnalogous to someone like Wright, a “Launch Architect” is

the primary designer of a product launch. After understanding the potential of a new product idea, a launch architect combines his or her extensive knowledge from disciplines that range from engineering sciences to social sciences to create an innovative launch design. The initial design should be developed following the ideation phase or in parallel with the very early traditional en-

Launch Pad

Who will you designate as “Launch Architect”?

Mark A. Hart, NPDP, Visions Launch Editor, Founder, OpLaunch ([email protected])

In a large percentage of new product efforts, most of the engineering development is finished before the launch plan is assembled. Typically, the launch plan is built by a cut-and-paste method with a predisposition for popular components. To increase the effective-ness of future launches, Visions Launch Editor Mark Hart introduces the concept of a “Launch Architect.”

gineering activities. This early-on approach ensures that the proper resources are enlisted and that the components can be produced and orchestrated for maximum impact. Throughout development, the launch architect refines the design and the appropriate high-level schedules, milestones, and checklists as illustrated in Exhibit 1 on this page. These are documented in the launch plan.

Without a comprehensive launch design, a launch plan is likely to feature only a list of critical marketing-related deadlines. With-out a designated launch architect, a launch is likely to be a collec-tion of a few isolated examples of innovation mixed with whatever is popular as illustrated in the comic strip on page 7. Besides core development activities, it is common for team members to specu-late about selecting and integrating contributions from disciplines such as interaction design, industrial design, packaging, brand management, search engine optimization, distribution channel management, partner management, public relations, advertising, documentation, post-sales support, tradeshow management, Web 2.0, or the next-big-thing to create a successful launch.

In the absence of a launch architect, reductionism prevails. Suboptimization occurs when team members emphasize certain popular components while ignoring other components to the point of reducing the potential for launch success.

“Launch architecture” is the interdisciplinary design of new product launches. It provides a robust, system-level plan to complete all of the development within the project constraints. It

up Front

Mark A. Hart

SOURCE: The Author

Exhibit 1: The Role of the Launch Architect Is to Refine Design


includes the entire launch environment from the macro level of prioritizing product features to the micro level of developing the search engine optimization strategy.

Launch Architecture Launch architecture is a development activity that naturally

follows the front end of innovation. New product development begins when one idea is selected from many potential product ideas. Launch architecture provides the design to combine many development ideas from multiple disciplines to create a synergistic

launch. Launch syn-ergy is the positive in-cremental performance gain of the team that is greater than the pre-dicted performance of the individuals working together.

Initially, the charac-teristics of the budget,

product, company, or the market influence the decisions about the type of launch architecture that should be developed. For example, the launch architecture for a radically new, globally distributed product will be different than the launch architecture for a mature, commodity product.

Details of the launch architecture include activities such as selecting, developing, and communicating product specifications, features, and benefits. Ultimately, launch architecture influences product reviews, including consumer generated media, the first-person commentary shared about the experience catalyzed by the product.

Launch innovation Opportunities for innovation are enhanced when a creative and

valuable launch design is shared with the entire multidisciplinary, networked development team and improved by the feedback process shown in Exhibit 1. The launch design guides decisions regarding team composition and highlights opportunities for col-laboration. A launch architect expands the development team’s vision of how a diverse set of contributions will fit together to fulfill the needs of end users, buyers, distributors, and retailers. Under these conditions, implementation is efficient and cost-ben-efit analyses are representative of system objectives.

I coined the phrases launch architect and launch architecture while preparing a proposal for a potential client in November 2006

“ Without a designated Launch Architect, a launch is likely to be a collection of…whatever is popular.”

as an alternative to the “build it, then learn how to sell it” sequence common in many development environments. This concept advo-cates a new “launch design drives development” method.

Creating a solutionA masterful launch architect transforms the product champion’s

desire of “I want a fantastic product” into a marvelous solution that addresses the key customer insights and provides the high-level view of the development requirements. Great launch archi-tecture has an “I’ll know it when I see it” quality. Great launch architectures produce pleasant customer experiences such as “The product solved my problem. It was easy to purchase and learn. It is a delight to use.” Or “Wow!”

Mark A. Hart, NPDP, Visions Launch Editor, is the founder of OpLaunch, Finleyville, Pa.

SOURCE: The Author

When companies plan the launch of a new product piecemeal, they may select conventional solutions. That could mean missing out on

an opportunity to be creative.


enced in my January 2005, Visions article.3 FAME represents the Frequency of reporting metrics, the Audience for the metric, the Mechanism of communication, and the Expectations of behaviors resulting from the information. The FAME tool helps the user overcome the misperception that metrics are a “data dump” from the accounting department, or a “silver bullet.” Metrics are a form of communication that managers use to gain insights for taking proactive action. FAME helps to answer the questions, “Who needs to see the metric? How often do they need to see it? How will they receive the information? What is the expected use?”

As an aside, the FAME and RAID acronyms suggest a sequen-tial ordering that might be unnatural. For me, it makes the most sense to sequence communications by Audience then Expectation then Frequency then Mechanism. However, the resulting AEMF order is not memorable. Nor is AIDR, which is probably the most logical sequence for addressing the anxieties of a project. One important difference in the analogy of hand tools and managerial tools is that managerial tools are largely stored in an individual’s memory; so, an individual’s skill starts with the ability to remem-ber the tool at the needed time. See the endnotes for more on the use of acronyms as a business tool.4

The third acronym is SWIFT, which stands for Strengths, Weakness, Individuality, Fixes, and Transformation. Product in-novators use this tool in NPD concept development as described in Chapter 10 of PMDA ToolBook 2.5 The SWIFT tool helps to overcome the problem that people unintentionally filter out novel product ideas, giving the ideas too little assessment and evaluation. As I pointed out in the RAID discussion earlier, people tend to avoid ambiguity. Consequently, the organization tends to develop safe-but-uninspired product ideas. With the SWIFT tool, the team identifies the strengths and weaknesses of the concept. The team then clarifies the individuality of the concept, meaning, “What makes the concept novel or different?” The “fixes” step is intended to shore up the weaknesses that could cause decision-makers to kill the idea, and the “transformation” step results in a revised product concept statement that incorporates the fixes.

Function and form of a managerial toolOne similarity in the analogy of hand tools to managerial tools

is that we can use the common framework of Function, Form, and Fit (the 3Fs) of an item for evaluating a tool. When we describe the behavior of a tool with regard to the intended outcome, we are describing its function. When we characterize the item to others, we are usually describing its form. Last, our evaluation of the

Workers—be they manual laborers or managers—want better and more tools because tools can make their work easier and the results of higher quality. Most people

intuitively regard a tool as something that helps with work, so I define a tool as an “object” that people perceive as contributing to results. The Exhibit 1 formula suggests two questions. The first is, “What is the result you want to achieve?” While it seems to be

commonsense, I observe that many people spend so much time in motion that they have lost sight of their goals. A tool cannot help them much until they decide what they want. The second question is, “How much force are you willing to apply?” Tools

might make your work easier, but they might require more thinking than you are willing to invest. Even if the individual is willing to apply effort, some tools require the cooperation of others—and they may be unwilling. My readers who have some knowledge of physics might recall the definition of work as “the scalar product of the force applied and the distance moved by the object.” One can see the parallel in Exhibit 1 on page 9 with the definition.1

Three examples of a managerial toolTo set the stage for a conceptual look at tools, I want to describe

three examples of managerial tools used in innovation. These tools may be familiar to those individuals who are well-read in Product Development and Management Association (PDMA) literature, but they could be new to many readers. They are simple, yet serve to illustrate the theory.

The first is RAID, as described by me in Chapter 8 of PMDA ToolBook 1.2 An initial risk management activity is for the team to generate a list of “concerns” that could affect the project’s success. RAID is a classification strategy and stands for the Risks, Assump-tions, Issues, and Dependencies that New Product Development (NPD) managers must manage in projects. The team will get improved results by using techniques specific to each classifica-tion. For example, one uses assumptions analysis to understand uncertainties in assumptions, issues management for issues, risk management for risks, and schedules for dependencies.

The second acronym is FAME, a metrics communication tool that I learned from Mary Wojtas of Abbott Laboratories and refer-

Gregory D. Githens, Managing Partner, Catalyst Management Consulting, LLC, Findlay, OH ([email protected])

When innovators connect with each other, the first topic for discussion is often, “What tools are you using?” Success in product development and management is largely an approach to find new tools and to implement the effective ones. This article gives the innovator three tools—SWIFT, RAID, and FAME—and pinpoints the factors that make each tool effective. The article concludes with four suggestions on how to become a better tool developer and user.

Gregory D. Githens

“ Tools might make your work easier, but they might require more thinking than you are willing to invest.”

up Front

In Focus: Tools Part 1

Comprehending innovation tools–Understanding functions and form to get better results,


interfaces of components of the item, or with other items, or with the user is the fit. This article explores the hand tools–managerial tools analogy for just the categories of function and form, and leaves the discussion of fit for a future article addressing the is-sues of managing innovation with relatively more sophisticated and complex tools.

Starting with the concept of function, suppose you need to have a surface covered with paint. Many people would jump quickly and intuitively to a solution: use a paintbrush or roller. Surely, there are alternative solutions, and some of those alternatives are improvements. We can look to the common NPD practice of functional analysis for help with the requirements for the tool. Functional analysis starts with developing a state-ment of functions (written as a verb + noun = the activ-ity that yields the desired result). In the surface-cov-ered-with-paint example, the primary function is this: apply paint. Given the function of apply paint, it should be easier to see that there are numerous techniques for applying paint—for example, dipping, spraying, and brushing.

Managerial tools—the concern of NPD practitioners—are similarly amenable to functional analysis. Let’s return to the three tools of RAID, FAME, and SWIFT and express the functions of each tool using the verb + noun format. The basic function of the RAID tool is that it helps the user categorize concerns. This further implies that the analyst may choose to quantify risk, man-age issues, and so forth. The basic function of the FAME tool is that it helps the user structure communications. Thus, we design the metric strategy in terms of how the audience uses the metric information. Finally, the SWIFT tool is more sophisticated. Its basic function is that it helps the user increase the robustness of the product concept statement. SWIFT helps the user to recog-nize novelty, recognize potential flaws, develop mitigation, and rearticulate product concepts.

Recall that the form relates to how we would describe an item to another person; for a hand tool, you describe the materials. I own an old hammer with a wooden handle, a steel head, and a small steel wedge to enable the handle to join to the head. One can improve a hand tool by using different materials. On a recent trip to the hardware store, I notice that there are a lot of wood-replac-ing “improved materials” in tools—for example, a composite, designed to make them lighter, stronger, cheaper, etc.

It is more difficult for us to describe the components that make up a managerial tool. My own experience is that tool development is serendipitous. I find that I subconsciously invent or modify a tool, and then afterwards recognize the accomplishment. The starting point for making tool development more purposeful and systematic is describing the basic components of managerial tools. Fortunately, I was able to find some research from a team of in-novators at the multinational company Philips, one of the largest electronics companies in the world, founded and headquartered in The Netherlands.6 I cannot tell you whether the managerial tools program continues, but I found the work logical and consistent with my experience. Here is how I interpret their answers to the question, “What are the components of a managerial tool?” The components of a managerial tool use or blend three core mental elements: concept organization, logic, and ingenuity. The mind

applies the element of concept organization to clarify and catego-rize perceptions and data. The element logic involves the mental operations to reach a conclusion. The ingredient ingenuity is the pragmatic application of imagination to solve a problem. I think that RAID is mostly a tool of concept organization. FAME uses concept organization but adds an element of deductive logic. SWIFT embraces concept organization and logic, and adds the element of ingenuity.

Outstanding versus mediocre innovationIn my experience, the difference between outstanding innova-

tion and mediocre innovation is one of decision making—indi-vidually and collectively. Tools simply facilitate de-cision making, sometimes by sparking analytical insights and sometimes by improving communica-tions between people. You should dedicate yourself

to making better (and faster) decisions to get your organization to improve its innovation performance.

Managerial tools help a person think better. They make the user more conscious of his or her thinking and data. A good manage-rial tool sparks questions that lead to insights. In the examples provided here, the tools foster innovation by helping us reframe. RAID helps us reframe anxieties into categories that can be ad-dressed systematically and consistently. FAME helps us reframe metrics in terms of communicating for improvement, rather than as a scorecard for blaming. SWIFT helps us reframe product concept weaknesses into novel, competitive offerings.

Where might you go from here in your use of tools? I have four suggestions. First, you might work to develop mastery-level skill with your existing tools. Second, search for better tools to increase performance of existing functions. Third, search for more tools, matching problems and needed functions with capabilities. And, finally, start a structured analysis of the individual and organiza-tional “toolbox.” Implementing these recommendations will help you maximize the tools you select and improve your New Product Development process.

Greg Githens is a Senior Contributing Editor to Visions, and Managing Partner, Catalyst Management Consulting, LLC, Worthington, Ohio.

Endnotes1. See http://library.thinkquest.org/20331/physics/pwork.html.2. Gregory D. Githens, “How to Assess and Manage Risk in NPD Programs: A Team Based Approach,” chap. 8 in The PDMA Toolbook for New Product Development (Volume 1), eds. Paul Belliveau, Abbie Griffin, and Stephen M. Somermeyer (Hoboken, N.J.: John Wiley & Sons, 2002).3. Gregory D. Githens, “Advice from PDMA’s annual ‘Metrics That Matter in NPD’ Workshop,” Visions (January 2005) [online edition]; available from http://www.pdma.org/visions/jan05/metrics.html.4. See http://www.businessballs.com/acronyms.htm.5. K. Brian Dorval and Kenneth J. Jauer, “The Birth of Novelty: Ensuring New Ideas Get a Fighting Chance,” chap. 10 in The PDMA Toolbook for New Product Development (Volume 2), eds. Paul Belliveau, Abbie Griffin, and Stephen M. Somermeyer (Hoboken, N.J.: John Wiley & Sons, 2004).6. Jerry Rhodes, Conceptual Toolmaking, Expert Systems of the Mind (Oxford, U.K.: Basil Blackwell Ltd., 1991).

Tool + Applied Force = Result

Exhibit 1: People Use Tools to Achieve Results


Viewpoint

One more word on ethnography

Gerry Katz, Executive Vice President, Applied Marketing Science, Inc. ([email protected])

up Front

Gerry Katz

Gerry Katz’s contrarian article in September 2006 Visions expressed skepticism about the appropriateness of this very popular research technique in certain situations. In the March issue of Visions, Anne Orban wrote a rebuttal to that article; here is Gerry’s response.

I’d like to thank Anne Orban for her thoughtful rebuttal to my Viewpoint article in the September 2006 issue of Visions. I firmly believe that this kind of healthy debate can only help

to better inform New Product Development theory and practice and further the cause of our profession. Even so, I would like to address some of her concerns directly.

The tone and essence of Anne’s article suggests that she feels a need to defend ethnography against an unwarranted attack by me, as if I were saying that ethnography is not all it’s cracked up to be. Nothing could be further from the truth! As I wrote in my original article, I’ve now used ethnography on more than 30 cases over the past few years; and in nearly all, it has been highly beneficial, even essential, in gathering a complete understanding of customer needs. To be sure, we were not the first to arrive at this party. I give Anne and her colleagues immense credit for their numerous articles and presentations, which have had a major impact on my own understanding and application of ethnographic research.

Identifying a disturbing trendThe intent of my article was not to discredit observational

research, but rather to call attention to a disturbing trend I have noticed among a large percentage of product developers. Many, it seems, have embraced ethnography as the universal cure for all their qualitative research ills, and seem blithely content to ignore most other data collection methods—techniques that have been tested and proven by marketing scientists and successfully applied by industry practitioners for decades. In my view, this approach is a mistake. As a compromise, I suggested that ethnography should be treated as one of several complementary tools in the product

developer’s toolbox. Anne is right to em-

phasize the importance of clearly articulating re-search objectives before any discussion of research method or sample size, but eventually research-ers must get down to the brass tacks of execution.

And from what I’ve seen, it doesn’t always happen this way. Far too many prospective clients approach us with ethnography as a precondition, making our first task as consultants to explore with them both the underlying objectives behind their prospective re-search and the practical realities of all the available techniques for their market. Only then are we able to recommend for or against using observational techniques. Yet because ethnography has now become “the new black” in Voice of the Customer (VOC), it is

sometimes difficult to persuade against its use despite the potential realities of the market under study.

The value of onsite interviewsI also fear that Anne has missed my point when she asks “Why

would it not be of value to talk with corporate risk managers in their offices?” It is not that onsite, observational interviews would not be of value, but rather that they would not add any apparent value over interviews conducted in some other venue. Conversely, if the study in question concerned copying machines or fitness equipment, the exact opposite would be true. One must keep in mind that onsite interviews take longer and cost more per inter-view, both in professional time and in out-of-pocket expenses, than other methods—hardly a trivial concern given today’s tight product development schedules and budgets. As in all things, compromise is often necessary to ensure that the VOC is captured accurately, quickly, and affordably.

The experience can be eye-openingParadoxically, Anne’s rebuttal cites a number of the most pro-

lific and successful users of ethnography in the world. One of the companies she cites has conducted nearly a dozen needs-finding studies over the past three years in which my own firm has been involved. In many of these studies, they used their own highly talented staff ethnographers, while in others they contracted with several outside vendors (including my firm). This company’s experience has been eye-opening, to say the least. Their conclu-sion? For certain kinds of studies, ethnography has proven to be far and away the most valuable approach. But in others, it has added relatively little. This company has actually now expressed its intent to move more toward central-location data collection for these latter types of studies. Precisely my point!

I’ve seen countless new market research tools come and go in New Product Development. Some are clearly fads, while oth-ers—like ethnography—have deservedly earned their place in the product developer’s toolkit. But never have I seen a single tool render obsolete decades of established marketing science. In the October, 2001 issue of Visions, I published an article entitled “The One Right Way to Gather the Voice of the Customer,” the point of which was that there is no “one right way.” I still stand by that conclusion!

Gerry Katz is Executive Vice President at Applied Marketing Science, Inc., in Waltham, Mass.

“ Ethnography should be treated as one of several complementary tools in the product developer’s toolbox.”


What is “lean” about product development?

An overview of Lean Product Development

Katherine Radeka, NPDP, President, Whittier Consulting Group, Inc. ([email protected]) and Tricia Sutton, PMP, NPDP, President, Sutton Enterprises, Inc. ([email protected])

Tricia Sutton

nPD Trends/Practices

Lean Product Development can mean many different things. In some companies, lean product development simply stands for “doing more with less.” In others, it has become a euphe-

mism for downsizing, off-shoring, and de-investing in product development. Companies with “Lean” or “Six Sigma” corporate initiatives often use lean product development to describe how

they apply their toolkit in the product develop-ment function. But very few of these definitions describe how a lean ap-proach can help a prod-uct development team deliver products better, faster, and cheaper than they have been able to do in the past.

To add to the confusion, the consultants and authors who tout lean product development talk about a wide variety of different things. Some emphasize waste elimination. Others talk about how to improve flow in product development. Visiting the experts’ Web sites leads to more confusion as the lean jargon proliferates: kanban systems, value stream maps, 5S, A3, obeya, etc. (See the PDMA Glossary at www.pdma.org for a definition of some of these terms.)

We are writing this article to clear up some of the confusion about lean product development and to show how some of the ideas can help any team develop products more effectively, whether or not “lean” is the right label for your improve-ment efforts.

Whence comes Lean Product Development?In our experience, it helps to introduce people

to lean product development with a short history lesson.

In 1990, the researchers of the MIT International Motor Vehicle Program (IMVP) published The Ma-chine that Changed the World: The Story of Lean Production.1 John Krafcik coined the term “Lean Production” to describe an approach that used less of everything—less manufacturing space, tooling,

Katherine Radeka

What is Lean Product Development? The term has many different meanings. This article describes the varieties of approaches that call themselves Lean Product Development and explains how lean principles and practices place customer value at the center of product development.

raw materials, inventory, and labor—and did it significantly faster and cheaper than traditional mass-production techniques.2 Since then, “lean” has leapt into the corporate lexicon: Lean Manufac-turing, Lean Office, Lean Enterprise, Lean Supply Chain, Lean Six Sigma, and now Lean Product Development.

In 1996, James Womack and Daniel Jones published Lean Thinking,3 which outlined five principles that they believed a lean organization embodied throughout the enterprise: (1) value, (2) identifying the value stream, (3) flow, (4) pull, and (5) perfec-tion. A lean organization understands what value means—for a specific customer at a specific point in time, knows how the value stream creates that value, improves the flow of value to the customer, leverages the power of pull systems, and relentlessly pursues perfection.

Lean manufacturing has evolved a number of specific tools for improving production productivity. These tools include value stream mapping, a tool for visualizing flow in a factory process; 5S, which cleans up and organizes a physical space; and kanbans, which control the flow of work-in-progress inventory through the factory. It seemed natural to the proponents of these tools to move

“ Consultants and authors who tout Lean Product Development talk about a wide variety of different things.”

Toyota’s product development system is considered a model of “lean” product development. Shown here is the company’s 2007 RAV 4.



them upstream into product development, especially when teams began running into issues that only a design change could fix. That led to attempts to translate the tools into product development, especially value stream mapping.

There now are numerous publications, workshops, conferences, and so on to help translate lean from production to other parts of organizations; yet the adoption in product development has been slow and in some cases problematic. We believe the reason is that lean product development as practiced by most companies has been driven too much by tools (particularly those of lean manufacturing) and has not focused enough on how Toyota and other lean companies create more value from their investments in product development.

Creating value in product development“Value” in the lean world is “a capability provided to a customer

at the right time at an appropriate price, as defined in each case by the customer.”4 This strict definition forces a business first to understand customer value deeply and second to focus relent-lessly on delivering that value. This laser focus on value is the key differentiator between Toyota and Honda, the two prototypical lean companies in the automotive industry, from General Motors, Ford, and the rest.

Such strict definitions challenge conventional thinking about how to run a business. For example, companies spend inordinate amounts of resources on documentation and reporting. Product developers report on project status, write detailed specifications and technical briefs, conduct extensive market analysis, etc., all of which contribute absolutely nothing to customer value. In the lean world, these activities are all waste.

The lean enterprise differentiates between waste that is com-pletely unnecessary (such as rework to fix a mistake) and waste that is necessary (such as regulatory requirements and some man-agement activities). All unnecessary waste should be eliminated and the necessary waste should be minimized. For status reporting, this directive means replacing fancy PowerPoint® presentations with simple one-page status summaries.

Since customer value is at the center of lean thinking, Toyota has gone to great lengths to put direct understanding of customer value in the hands of the people who need it most. At Toyota, chief engineers lead development projects and are chosen for their abil-

ity to integrate customer, technical, and process knowledge into a vision for a superb automobile. The company charges them with delivering a car that will exceed the customer’s expectations and meet cost targets and hit a specific delivery date.

Toyota expects its chief engineers to obtain a firsthand under-standing of customer value. The chief engineer for a Lexus may travel to Germany to drive the top-of-the-line Mercedes on the Autobahn. The chief engineer for the Sienna minivan spent a month living with the typical soccer mom in the United States. U.S. companies often dismiss such activities as too “fuzzy” and too expensive. Lean companies know that this direct experience of customer value is too important to do on the cheap. Toyota values the judgment and experience of its chief engineers as much as hard data, such as marketing research.5

We create more value in product development by doing things better, faster, and/or cheaper than we have been able to do things in the past. In other words, we shorten time-to-market, we decrease product costs over the entire life cycle of a product, we better align our product’s feature set with the things our customers value, and we produce a higher quality product. Every product development organization tries to achieve these objectives, usually with one or two that take priority over the others.

These objectives make sense for our customers and for our businesses. Faster time-to-market gets innovation into the hands of our customers more quickly—and it increases our sales and market leadership. Delivering a product with lower costs directly benefits the bottom line while it makes products less expensive to purchase.

We decide which of the dimensions of value to optimize and how to allocate that value between ourselves and our customers. As our organization improves, we eventually gain the ability to deliver products better and faster and cheaper than our competi-tors. Once we have achieved that level of mastery, we will be very difficult for our competitors to catch.

Major approaches to Lean Product DevelopmentThere are five major schools of thought on how to implement

lean product development, as shown in Exhibit 1 on page 13. Of those, we believe that three have the greatest potential to maxi-mize value in product development, one has limited usefulness, and one is simply “lean” in name alone. Each approach has some elements that are unique and some areas of overlap. Ex-hibit 1 presents a visual model of the lean product development landscape and how these approaches relate to each other. Exhibit 3 on page 14 compares the approaches, including summarizing the benefits to be gained to help you determine which approach(es) to lean will fit your organization and your most pressing needs.

(1) Toyota Product Development System This approach to lean product development is grounded in re-

search that describes how Toyota develops its own products better, faster, and cheaper than U.S. automakers. This research shows that Toyota’s product development system developed alongside the famous Toyota Production System, and the two support each other.

Top Five Questions to Help Start Your Lean Journey

1. What is value to your customers—both end users and intermediate customers?

2. How can you transcend tradeoffs between delivering value to intermediate customers and end users?

3. What required process deliverables create waste?

4. What process deliverables (required or optional) directly contribute to customer value?

5. What activities in your process add needless waste?

“ Some of the (lean) ideas can help any team develop products more effectively.”

1�JUNE 2007PDMA Visions MAgAziNE

While they share the relentless pursuit of perfection and a “kaizen” mindset that makes every member of every team responsible for finding ways to do things better, they are not the same.

The hallmarks of Toyota’s product development process include frontloading the effort into the early stages of development to ensure a smooth transition to production at the end of develop-ment, the chief engineer, set-based concurrent engineering, true partnerships with suppliers, and a deep understanding of the role

that knowledge plays in product development.

The University of Michigan began re-searching Toyota’s product development in 1995. The findings are best documented in two books published in the last 18 months. The Toyota Product Devel-opment System by James

P. Morgan and Jeffrey K. Liker describes the elements of Toyota’s product development in detail.6 Dr. Allen C. Ward’s book, Lean Product and Process Development was just published in Febru-ary 2007.7 It describes the concepts and practices that Dr. Ward observed in his early attempts to translate the ideas into U.S. companies. Unfortunately, Dr. Ward died in a plane crash in 2004 before he could see his ideas translated into reality.

This version of lean product development is the one that we have seen achieve the most dramatic results. The practices that Toyota uses internally to grow and share knowledge—its lean system—are readily transferable to other organizations, which can begin to see results quickly. Unlike other forms of lean product development, these practices help the entire product development team spend more time directly creating customer value immediately.

(2) Lean principles in product developmentSome of the most interesting work in lean product development

has taken a value-centric approach. These authors apply the lean principles to New Product Development and let the tools and methods emerge from their observations.

The most frequently cited sources for this work are Don Reinertsen’s Managing the Design Factory8 and Mary and Tom Poppendieck’s Lean Software Development.9 Reinertsen and the Poppendiecks use the original principles behind lean—value, the value stream, flow, pull, and perfection—as their point of depar-ture. They then ask, “What do these principles mean in a product development organization?” While the authors end up in very different places, the advice they have for product development teams is highly insightful and relevant.

Reinertsen integrates the concept of flow with queuing theory, information theory, and the theory of constraints to develop an approach to managing flow in a product development organiza-tion. The Poppendiecks begin with the concept of value and the value stream in a software development project. They synthesize lean concepts of waste elimination, pull, and perfection with best practices from agile software development to gain some insights that apply to any product development team—not just software teams.

Both sets of authors have suggestions for improving resource

utilization to improve flow—which gets more products out the door faster with the same resources.

(3) Design for lean productionThis approach optimizes product designs so that they are easier

to make in a lean production environment, including the manu-facturing, assembly, supply chain, and distribution. Much of the impetus for applying this approach has been from the manufactur-ing functions, particularly as companies make increasing efforts to move lean tools and practices through the enterprise. Although some teams have focused exclusively here, most have combined this approach with one or more of the other approaches to lean.

This approach consists of a set of tools for reducing the down-stream costs of the product in manufacturing, service, and support. The tools draw from methods used inside Toyota and elsewhere to make products easier to manufacture and assemble. The best

SOURCE: The Author

SOURCE: The Author

The authors explain that there are five primary approaches to lean (Exhibit 1). They believe that of these three have the greatest potential to maximize value

of product development (Exhibit 2).

“ The hallmarks of Toyota’s product development process include frontloading the effort into the early stages of development.”

Exhibit 1: The Landscape of Lean Development

Exhibit 2: Lean Approaches with the Most Potential


book on this subject is Design for Six Sigma by Dr. Kai Yang and Basem EI-Haik.10

Design for lean production does not attempt to change the product development system at all and says nothing about how to help a product development organization work more effectively, so changes in time-to-market or engineering capacity will be small. The techniques, however, can dramatically lower total product

costs and improve prod-uct reliability.

(4) Lean toolboxThis approach at-

tempts to apply tech-niques from lean manu-facturing in product de-velopment. Most often, a team will try to put

together a value stream map for the product development process. Less frequently, they will use other tools from lean manufacturing, such as 5S, work cells, and kanban systems in the engineering environment.

We are skeptical about how much this approach increases ac-tual value creation in product development. Engineers, scientists, and marketing analysts are not production workers; and product development takes place over months and years, not hours and days. These tools have the potential to do more harm than good, especially if trying to force information and knowledge creation processes into a linear flow. As stated earlier, these tools are not the ones that Toyota uses in its own product development process.

There are areas within product development that look more like manufacturing, and these areas do benefit from lean manufacturing tools. Prototype and model shops, procurement teams, and testing departments often do repetitive tasks on short cycle times. These micro-processes are natural candidates for transactional waste

elimination tools so that engineers obtain what they need more quickly and departments can run less expensively.

However, such actions will never result in the kind of change that leads to a major improvement. These tools are simply unable to show a development team that they need a product platform strategy or that the high number of engineering change orders at release-to-production can only be eliminated with more thorough investigation during the feasibility phase of development. They do not address the knowledge sharing or the early problem-solving and technical learning through experimentation that is inherent in the Toyota Product Development System.

(5) Relabeled leanUnfortunately, “lean” is considered a hot word right now; and it

has been co-opted inappropriately by tools and methods that have little to no actual connection with lean thinking or lean principles. Some use “lean product development” to describe a kit of tools that improve product development performance but without the overall theme of increasing value or eliminating waste.

Others take ideas that have been around for a long time in product development, such as phase-gate life cycles, and apply a lean label to them. If one looks below the surface, it’s essentially the same tool with a “lean” label on it.

Lean is more than just a toolbox or a label. If a practice is not centered on delivering a lot more value from product develop-ment, it’s not lean.

Recommended approachExhibit 2 on page 13 visually depicts what we believe is the best

combination of approaches. We have found that the best approach to lean product development integrates the Toyota Product Devel-opment System with the lean-principles-centered approaches of Reinertsen and the Poppendiecks, and supplements with design for lean production tools. This synergistic combination helps product

Lean NPD Approach Description and Tools Major Benefits Example Proponents

Toyota Product Development System (TPDS)

Grounded in research about Toyota’s product development system: A3 reports, set-based concurrent engi-neering, chief engineers.

Time-to-market, productivity, qual-ity, rapid learning, fewer changes at the end of development.

Durward K. Sobek II, Ph.D. Allen C. Ward, Ph.D.James Morgan and Jeffrey K. Liker (Description of TPDS)Michael N. Kennedy

Lean Principles Lean principles applied to product development: value, the value stream, flow, pull, and perfection.

Time-to-market, quality, produc-tivity

Don ReinertsenMary Poppendieck

Design for Lean Production Improves product designs so that they cost less, have more reliabil-ity and are easier to manufacture: TRIZ, DFMA, Poka-Yoke (Mistake-proofing)

Product cost, quality Kai Yang, Ph.D.Bart Huthwaite

Lean Toolbox Lean Manufacturing tools applied in product development: value stream maps, 5S, work cells.

R&D capacity James Morgan and Jeffrey K. Liker (Implementation approach)Cliff FiorePascal Dennis

Relabeled Lean Best/Good NPD practices given a lean label to make them more marketable. No real connection to lean.

None in terms of Lean and not breakthrough improvements. Some are useful for incremental improve-ment.

Robert CooperLean tool vendors

“ If a practice is not centered on delivering a lot more value from product development, it’s not lean.”

Exhibit 3: Comparison of Lean Product Development Approaches


development fill in the gaps between the explicit elements of the Toyota Product Development System and the things that Toyota takes for granted, several of which are not routine practices in other organizational cultures. Teams that use lean product development in this way achieve significantly more value from New Product Development in a reasonable timeframe.

Getting more value from product developmentHow can any product development team use these ideas to

improve its product development? We believe the five questions shown in the box on page 14 are particularly important.

First, get a good han-dle on customer value. How well do you know your end users? What constitutes value for end users? How well do you know your intermedi-ate customers (channel partners, resellers, cor-porate buyers)? What constitutes value for in-termediate customers? What are the inherent

tradeoffs between delivering value to intermediate customers and end users? How can you transcend those tradeoffs?

Next, take a good, hard look at your product development pro-cess. Some consultants advocate creating a value stream map of your process, but we do not believe that’s necessary. It is usually easy enough to find the low-hanging fruit. Where do you produce documentation that is always out-of-date because no one both-ers to read it or no one cares if it’s obsolete? Where does your product development process require creating “sales pitches” for internal customers? What deliverables does your process require? Which ones directly contribute to customer value? Which ones just get stuck in a file drawer? Which meetings engage all of the participants and in which ones do participants read E-mail while waiting for the few minutes that are valuable to them?

Think about program leadership: Who in your organization makes the major decisions about product development? How well-integrated are marketing and engineering? Do they have the ability to speak the same language? Do you have anyone like a Toyota chief engineer who has the ability to see the whole picture: customer, market, and technology?

Take a hard look at how much effort you exert in the end of the process versus how much you spend in the beginning, when exploration is relatively cheap. How difficult are your transitions to production? What can you do to “move the mountain” for-ward—to put more efforts in the early stages of development so that you use fewer resources later and avoid unplanned loopbacks due to failures?

Finally, what organizational barriers foster the waste of rein-vention? How easy is it for teams to share information with each other? How easy is it for one product team to benefit from what another product team has learned?

These areas tend to be low-hanging fruit in product develop-ment, where putting on a “lean hat” for just a few minutes can help identify new ways of working to achieve better, faster, and cheaper—all at the same time.

Katherine Radeka, NPDP, is President of Whittier Consulting Group Inc., located in Camas, Wash. Tricia Sutton, PMP, NPDP, is President of Sutton Enterprises Inc,. in Waukegan, Ill.

Endnotes1. James P. Womack, Daniel T. Jones, and Daniel Roos, The Machine that Changed the World: The Story of Lean Production (New York: Harper Perennial, 1990).2. Ibid., 13.3. James P. Womack and Daniel T. Jones, Lean Thinking: Banish Waste and Create Wealth in Your Corporation (New York: Free Press, 2003 edition). (First published in 1996.)4. Ibid., 353.5. Durward K. Sobek II, “Principles that Shape Product Development Systems: A Toyota-Chrysler Comparison” (Ph.D. dissertation, University of Michigan, 1997) 88.6. James P. Morgan and Jeffrey K. Liker, The Toyota Product Development System: Integrating People, Process, and Technology, (New York, N.Y.: Productivity Press, 2006). 7. Allen C. Ward, Lean Product and Process Development (Cambridge, Mass.: Lean Enterprise Institute, 2007). 8. Donald G. Reinertsen, Managing the Design Factory (New York: Free Press, 1997).9. Mary Poppendieck and Tom Poppendieck, Lean Software Development: An Agile Toolkit for Software Development Managers (New York: Addison-Wesley Professional, 2003). 10. Kai Yang and Basem S. EI-Haik, Design for Six Sigma: A Roadmap for Product Development (New York: McGraw-Hill Professional, 2003).

“ The practices that Toyota uses internally to grow and share knowledge—its lean system—are readily transferable to other organizations.”

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“Touch the Market began as... an unsanctioned event...that eventually became an approach that critically influences new vehicle programs.”

Hyundai uses “Touch the Market” to create clarity in product concepts

Heather Kluter, Manager, Consumer Insights and Product Strategy ([email protected]) and Doug Mottram, National Manager, Brand Development ([email protected]), Hyundai Motor America

Customer-centric innovation is a mantra in product development right now. But there are so many approaches to it: How does a company select one—especially at the concept stage? Or know that the process it has developed will really bring it the right customer input? In this article, the authors explain how Hyundai did this, and is now incorporating its new customer-central process called “Touch the Market” into product development efforts throughout the company. Their article focuses on the first use of the process: development of Hyundai’s second generation Santa Fe, launched in 2007.

Doug Mottram

Cover Story

The second generation of the Santa Fe, which Hyundai in-troduced in 2007, represented an entirely new design direc-tion for our company. It is a sleek, car-like, sophisticated,

crossover vehicle tailored to consumers in the United States, very different from its predecessors, as shown in the photo on this page. Within the company, the car was the result of a major challenge—to create a vehicle that would be considered “asser-tive yet graceful.”

In order to meet that challenge, Hyundai Motor America (HMA) took an entirely new approach. In fact, at the start our product development, design and engineering teams actually headed for a skating rink rather than the office. The idea was to scoot around the ice with the kind of “grace

and speed” we were aiming at. We watched while Olympic medal-ist Rusty Smith raced around the rink at top speeds, bringing to life the Santa Fe’s design objective.

Smith put on a skating demonstration and talked about aspects of his sport that convey graceful assertiveness. You can do Power-Point slides all day long, but we wanted a real-life design metaphor. The research and product development teams were charged with communicating “assertive grace” so that Hyundai could design its second generation 2007 Santa Fe. So began a weeklong series of events that we called “Touch the Market” attended by cross-func-tional teams from Hyundai around the globe. In this article, we want to guide you through the process we used to come up, at long last, with our second genera-tion Santa Fe.

In order to ad-vance the state of product develop-ment within the

Heather Kluter

organization, the Consumer Insights and Advanced Product Development teams at HMA had to convince the rest of the organization that this would be an effective way to develop and communicate new product concepts. Typically the bulk of inno-vation work is done within the research and development (R&D) department. However, many of the ideas and opportunities to please the customer fall outside of R&D. Consequently, HMA had to develop a plan to involve “innovators” from a cross-section of the company, both in the United States and South Korea, from not only Design and Engineering but also from Product Planning, Market Research, Marketing, and Public Relations. Developing a consensus was essential for us to obtain a buy-in to improving the product innovation process—a very encompassing structure.

Developing better vehiclesOur challenge was clear: How can we develop better vehicles,

vehicles that better fulfill the needs of the customer? These are formidable challenges and it takes a lot to achieve them. But we knew that companies that learn to manage the overall product development process, internally and across all the groups in a very large and often disjointed company, are in the best position to achieve this. The competitive landscape of the automotive industry is changing fast and dramatically. Best-in-class product developers and manufacturers are better able to coordinate the vehicle development process internally and on a global basis.

One way to become an agent of change is to combine data with creativity. This melding can act as a change agent to transform a company into a consumer-centric enterprise. Our thought was to create a new approach that combines team building and consumer

research (and lat-er, product inno-vation) to educate, excite, and create cross-functional a n d ex t e n d e d project team man-agement. We were looking to go be-yond information exchange in order to achieve two pri-mary goals. We wanted to build

The result: The new 2007 Santa Fe

Hyundai used “Touch the Market” to develop the concept for its second generation Santa Fe, launched in 2007



desire, excitement, and commitment among key individuals and groups to implement significant change or strengthen the com-pany culture. In addition, we wanted to manage the company strategically to increase operational performance and competitive advantage, and to better satisfy customer values.

The brainchild: Touch the MarketIn other words, we wanted to get out of the boardroom, away

from PowerPoint®, and into the real world. We created a process called Touch the Market (TTM) to do this. It is a process that includes senior management-focused project phase reviews, development process metrics and process improvement actions, continuous product and manufacturing process improvement, stra-tegic cross-generational product and platform management, and technical, team-based concept evaluation. Actually, TTM began as an innovative experience—an unsanctioned event conducted by HMA that eventually became an approach that critically influ-ences new vehicle programs.

With concept development studies and consumer segmenta-tion acting as the connecting bonds, we wove actionable insights into the TTM activities and dimensionalized the Santa Fe design concept in a way never before done at Hyundai. TTM was a multi-day experience that brought together a cross-functional and cross-cultural team in the U.S. market to learn about the product concept. It also involved direct contact with consumers. The selec-tion of activities allowed a deeper understanding of the product concept, and the discussion led to innovative ideas appropriate for the concept. There were numerous objectives for our event as shown in the box to the right.

tive Grace: Seemingly effortless expression of confident beauty, form, and proportion.

By interpreting attributes identified in the segmentation study, we used imagery comparisons to help designers and marketers understand the concept. Based on the segmentation study, we also created an image target consumer to help communicate the type of driver for whom this product was being developed as shown in the slides in the box on page 18. We called this target “Glamour Mom” and screened numerous women to find a handful of true glamour moms who fit the demographic and lifestyle description of this target.

Inspiring the team through ethnographyIn order to help the team gain a deeper understanding of the

glamour mom, we ventured out into where these women lived: their homes, hearts, and world. We got to know what mattered to them, so that we could make the Santa Fe more meaningful to them. This type of ethnographic research takes into account that what people say does not always jive with what they think and feel. So we watched, listened, asked questions, and let people speak freely about their lives. Ethnographic research allowed us to approach consumers as whole individuals in order to cre-ate products that connect them to the Hyundai brand. Working closely together as a cross-functional team, we were able to bring the lives of our image target into every aspect of the product development process.

During TTM, the group met a number of carefully selected target customers in their homes to get a better direct, hands-on understanding of their lifestyle and typical activities. Our members also spent the day shopping with the glamour moms in order to gain a better understanding of what motivates their purchases. We uncovered numerous insights; some of these are listed in the box on page 19.

Aiding non-American participantsThe team also explored model homes in a community-style

development favored by the target consumer. This activity was especially helpful in aiding the non-American participants in un-

Touch the Market: How It Work

Hyundai wanted to develop a new design concept for its second generation Santa Fe. To do that, it developed a technique called “Touch the Market.” By using that technique, the company wanted to:

• Clarify and communicate the meaning of the product concept (for the second generation Santa Fe),

• Go beyond the PowerPoint to generate a memorable experience,

• Expose the team to the target consumer,• Facilitate a healthy team discussion and establish team

relationships,• Create “advocates” for the U.S. concept in cross-functional areas,

and• Inspire creativity that leads to market-driven ideas for the

concept.

Hyundai Motor America: In Brief

Hyundai Motor America, headquartered in Fountain Valley, Calif., is a subsidiary of Hyundai Motor Company of Korea. Hyundai cars and sport utility vehicles are distributed throughout the United States by Hyundai Motor America and are sold and serviced by more than 665 Hyundai dealerships nationwide.

Incorporating Voice of the CustomerTTM events such as the one we ran come at the Voice of the

Customer (VOC) from a different angle. Stemming from tradi-tional VOC, TTM events are inspired by target consumers and give event attendees the chance to interact directly with this target consumer. In this case, we chose image target consumers—a much narrower consumer base than the ultimate consumption target for the product—so that product development would be tightly focused.

The process for the Santa Fe development began almost five years ago with a segmentation study conducted by Hyundai to identify consumers’ unmet needs to help shape the concept. The study uncovered some key design aspects not yet present in SUVs on the market at the time. These included glamorous design (as opposed to the boxy shapes then on the market)—a vehicle designed to generate attention and one that makes its drivers and passengers feel pampered and confident. The R&D teams at Hyundai synthesized the data and developed an interpretive translation of the research to create the Santa Fe concept: Asser-


derstanding the typical American suburban home and lifestyle.The team also experienced driving in the United States. We took

rides through Southern California to experience different vehicles. We drove from Orange County to Palm Springs and back again in order to do the same type of driving our target customer would do. We wanted to experience various aspects of the vehicles—styl-

ing, interior appointments, performance attributes. We decided not to include current direct competitors to the Santa Fe, opting instead for inspiration ve-hicles in order to reinforce

the need to look outside the segment to achieve leadership in the segment.

Finally, an overnight stay in Palm Springs at the Estrella Hotel, a complex that is modern yet glamorous, inspired the team to come up with key design imagery intended to inspire the designers of the new Santa Fe.

The result of Touch the Market researchParticipant feedback to the TTM events has been overwhelming.

Consider the quote below, received from a Korean designer: “The Santa Fe TTM was such a refreshing opportunity for me

in building the Santa Fe marketing strategy. Though the ways you chose to execute the event were actually so strange for a typical Korean like me because all I knew about TTM (Touch the Market) was that it’s just a kind of market research. I really want to show my appreciation for your efforts for Santa Fe TTM and your kindness to me.”

The result of all this TTM work was profound; it is the Z-shape profile for our second generation Santa Fe that emulates a speed skater’s race stance and profile and gives the vehicle a sense of speed. The interior combines a high-tech look with the warmth of wood, much like the design feelings inspired from the model homes visited and homes of the glamour moms.

Through TTM, the team was able to lay out the basics of a successful product development and communication experience to develop our second generation Santa Fe. The success of this experience has led to additional TTM events for other projects with even greater attendance and corporate attention. Attendance has grown from 12 participants to nearly 20 per event, and the number of functional groups attending has grown from four to eight divisions. The output has become more sophisticated and permanent, and focus target consumers are now a recurring part of the four-year product development cycle, with the same consumers providing feedback as the concept evolves.

Improving the TTM structureThe TTM experience has since been significantly enhanced

by the addition of a competitive activity, with the group split into small teams intended to energize the participants and lead to deeper understanding of the concept. On the final day of the event, teams gather for concept ideation—a creative burst applied to the now clearly understood concept that results in an impres-sive list of new ideas for the vehicle. Through team challenges and brainstorming sessions, the participants explore the concept in spirited discussions, which will ultimately lead to new innova-tions. Creative ideation yields numerous innovative features that enhance the framework of the concept.

Planning for the Second Generation Sante Fe

Hyundai screened numerous women to identify those who fit the demographic and lifestyle description of Glamour Moms, their target customer for the second generation Santa Fe. Here are some of the slides they used showing this research.

“Touch the Market is now a formal part of the development schedule.”

SOURCE: Hyundai


Motivators of Glamour Moms

Through ethnographic research, Hyundai was able to get a closer look at the values of Glamour Moms—the target market for Hyundai’s second generation Santa Fe. When they shop, these women are looking for:• Durability A Coach purse was selected because the leather lasts

and wears well, even after three or four years, important for a working mother

• Versatility A lot of black, because it mixes and matches with the balance of her wardrobe

• Unique accent pieces A red cell phone case was purchased because it stands out amongst the clutter of her purse

• Good customer service/knowledgeable salespeople A preference for shopping higher-end stores and willingness to spend more for good service/treatment

• Unique product advantages in function and/or style Brand is not as important as these elements

• Child-friendly shopping locations Areas where kids can play (toys, fountains, etc.), and shopkeepers who are friendly to parents shopping with children.

PDMA Conference Calendar—2007 and 2008

2007Sept. 29–Oct. 3 PDMA 2007 International Conference

The Product Innovation Connection Information. Education. Experience. Venue: Disney’s Contemporary Resort, Orlando, Fla.www.globalexec.com/pdma2007/index.php

Dec. 3–5 10th Annual Voice of the Customer (PDMA & IIR)The CALEO Resort & Spa in Scottsdale, Ariz.www.iirusa.com/voc

Dec. 17–19 �rd International Conference on Innovation & nPD PDMA India Conference 2007 Product Development for Developing Country Markets: Scope, Challenges and Management(PDMA & PDMA-India)Indian Institute of Management, Bangalore, India

Dec 17-18 PDMA India ConferenceProduct Development for Developing Country Markets: Scope, Challenges,and Management(PDMA & PDMA-India)Indian Institute of Management, Bangalore, India

2008Jan. 21-23 7th Annual Co-Development/Open Innovation

Conference(PDMA/Management Roundtable)Doubletree Paradise Valley Resort, Scottsdale, Ariz.www.roundtable.com/codev/

Jan. 28-30 2nd Annual Front end of Innovation in europe(PDMA &IIR) Vienna, Austria

February 1�th Annual Strategic & Operational Portfolio Management(PDMA & IIR) Date and location TBD. Usually in Florida.

March Service Innovation Design & Development(PDMA & IIR)www.iirusa.com/service

May 19-21 6th Annual Front end of Innovation(PDMA & IIR)Boston Seaport Hotel, Boston, Mass. www.frontendofinnovation.com

PDMA’s conferences offer expertise and information on virtually every aspect of innovation and New Product Development (NPD). Details and updates can be found at the PDMA Web site, www.pdma.org.

Since that first event four years ago, HMA has initiated TTM immersions for other vehicles, such as the future concepts of our Sonata sedan and Tucson SUV. We continued the evolution built upon team-building and introduced customized ideation sessions, which yielded many enhancements to the overall vehicle concept. Our designers and engineers have been able to incorporate these ideas into the entire product development process. With the Tucson, we went even deeper. Our TTM teams created concept Web sites that we uploaded into our Intranet for all to see and learn from.

At this point in time, TTM is now a formal part of the develop-ment schedule. Additionally and most importantly, the company now continually seeks ways to attain superior performance through frame-breaking ideas that make the competition irrelevant. We focus attention on factors that deliver the highest value to the customer, lead to discovery and understanding of new ideas, and break out of unquestioned industry traditions. Finally, we seek to identify aggressive, yet achievable, future performance targets most relevant to customer needs and values.

Today, TTM has legs within Hyundai, and it is spreading into other phases of the vehicle development and launch process. Now that the original TTM experience is well understood and integrated throughout the company, HMA plans to build upon its success and bring it to other parts of the company—and repeat it later in the development and marketing process. After all, it takes five long years to make a car; so it is a great challenge to keep the various groups focused on the concept and to inspire the effective execu-tion of the consumer-derived innovations started so long ago!

Heather Kluter is Manager, Consumer Insights and Product Strategy, at Hyundai Motor America; and Doug Mottram is National Manager, Brand Development, Hyundai Motor America.


From Open Innovation to Open Business Models—An Interview with Henry Chesbrough

Henry Chesbrough, Executive Director, Center for Open Innovation, Haas School of Business, University of California Berkeley ([email protected]); interviewed by Michael Docherty, Visions Open Innovation Editor and President, Venture2 Inc. ([email protected])

Henry Chesbrough


Michael Docherty: What do you think is behind the interest in and popularity of Open Innovation?

Henry Chesbrough: I think that many people in many companies felt that the earlier model of internal R&D [research and d evelopment] was no longer effective. Too little productivity, too many spillovers, too long a timeframe to go from inception to market—these were longstanding complaints. Two additional factors that have compounded the problem are the rising cost of R&D and the ever-shorter product life cycles in the market, should one be so fortunate as to get a project through to the market.

What was missing was any alternative way to address these problems. Open innovation increases R&D productivity, captures or leverages spillovers in other markets, shortens the time to get to market, and shares the rising R&D costs with others.

Docherty: With the great successes that com-panies like P&G and Kim-berly-Clark are claiming with open innovation, why aren’t we seeing more companies adopt open innovation models even faster?

Chesbrough: That is a very good question. I see two primary factors that are inhibiting the spread of open innovation. First,

we have many stories about R&D success, but still lack any large sample data on bottom line return on investment from adopting open innovation. Second, moving toward open innovation requires a number of changes to many organizational processes. These changes are costly and time-consuming themselves, so many companies are playing “wait and see.”

Docherty: What is the main concept behind your new book, Open Business Models? What was your motivation in writing it?

Chesbrough: Open Innovation was well received, but it was received mainly by the technology and R&D community. I be-came increasingly convinced, as I talked about the opportunities

As the leading writer on Open Innovation, Henry Chesbrough provides insights into this field that are well-respected throughout the corporate world. Chesbrough has just published his second book, Open Business Models: How to Thrive in the New Innovation Land-scape (Harvard Business School Press, 2006). His new book discusses creation of a business model for Open Innovation. Interviewed by Visions Open Innovation Editor Michael Docherty, Chesbrough offers observations that are sure to be useful to active practitioners in the New Product Development field.

for open innovation, that we would need to engage the business side of organizations in the innovation process in order to reap the full potential benefits of a more open business. More particularly, the business model is itself something that companies need to innovate, in order to get the most out of their innovation efforts. And very few companies have any clear processes that seek to innovate their business models. So I wrote this book in hopes of inspiring business model innovation.

Another important idea in the second book is the idea of emerg-ing secondary markets for intellectual property (IP). While this trend is at a very early stage, the presence of a secondary market will have powerful influences over how we organize innovation in the future. You see companies now like Qualcomm with IP-centric business models. You see intermediary companies like Ocean Tomo trying to facilitate trade in IP. This will enable new ways to innovation profitably, and it may also imperil some traditional ways to innovate profitably.

Docherty: Do you see companies looking more globally for technologies and partners? Is this a trend that we can expect to see accelerating?

Chesbrough: Yes and yes. Useful knowledge is now very widely distributed in most industries. If you’re in the cellular or wireless telephony business and you’re only tracking the research and development activities of companies and universities in the United States, you’re missing a great deal of what’s available. In countries like Finland, Taiwan, South Korea, and Israel, smaller societies are well ahead of the United States in technology de-velopment and especially deployment. This means that many of the value-added services that sit on top of wireless are emerging there first.

But it should be pointed out that not all industries are opening up their innovation process. I don’t think that the nuclear power industry is seeing much startup activity, or university research activity. The same is true for military weapons systems. Even in the defense area, though, some portions of the sector are opening up. The CIA [Central Intelligence Agency] has created its own venture capital fund, for example, called In-Q-Tel. This fund helps startup companies pitch new software and cryptographic technologies to the intelligence and defense communities.

Docherty: Some companies appear to equate open innovation

“We have many stories about R&D success, but still lack any large sample data on bottom line return on in-vestment from adopting Open Innovation.”

—Henry Chesbrough


Michael Docherty


with technology scouting. Do you see the same thing? How would you recommend that companies position and utilize technology scouting within their open innovation efforts?

Chesbrough: Scouting is a part of open innovation, but there is much more to open innovation than scouting. This misconception is due to P&G, I think. That company has done a tremendous job educating people about its “Connect and Develop” approach to in-novation. Connect refers to linking to external technology sources, which is pretty much like scouting. To position and utilize scouting effectively, one tip from P&G is to locate the function within your

R&D organization, rath-er than in purchasing or business development. This means staffing the function with former R&D executives, who understand the compa-ny’s technologies and processes. They will know what will work and what won’t work with the internal part of the company.

What else is there to open innovation beyond scouting? One whole area omitted in the P&G conception is letting unused internal ideas flow to the outside, through licensing, joint ventures, spin-offs, and increas-ingly, spin-ins, where a technology is allowed to go outside into a new venture, but is later brought back into the company.

Docherty: Do you see any other trends toward companies de-veloping more formal networks of external development partners, beyond technology scouting?

Chesbrough: Very much so. One trend is so pronounced that the government is now collecting data on it. The National Science Foundation [NSF] reported data on extramural R&D (where the company paid for it, but the work was conducted outside of the company) and on collaborative R&D (where a company worked with another organization on an R&D project). In the year 2004, the NSF found that three to four percent of R&D spending was spent on extramural R&D, and another three to four percent was spent on collaborative R&D. These are not huge percentages, but they add up to $9 or $10 billion in R&D for that year. And the fact that the government has started to collect these data is itself significant, in that it must see this trend developing, or else it would not have bothered to ask these questions on the survey.

Docherty: You talk about the role of out-licensing in your new book. Do you see this simply as a tool for leveraging unused intellectual property, or also as a way to leverage others’ busi-ness models?

Chesbrough: The way companies manage out-licensing var-ies with the company and its strategy. Most companies early on are trying to make a little extra money for their unused IP. Over time, however, as companies gain experience and confidence, they see more strategic ways to employ licensing. One of them is suggested in your question: to leverage other companies’ business models. This means that the company watches what the other companies are doing with their technologies, and learning from that experience. In many cases, the licensees have developed a different business model that finds value in a technology that the licensor did not perceive. In other cases, a licensee sees the market

and technology trends differently. In either case, companies have begun to figure out that having a number of interested licensees for one of your technologies is a powerful signal that this technology may be more valuable than you realize.

There are other ways to manage licensing though, beyond leveraging another firm’s business model. One is to use licens-ing to set a standard for your technology and get others to build upon it. Another is to donate it to a commons, so that others will innovate with it. We will see more innovative ways to manage licensing going forward.

Docherty: I hear a lot of companies talking about the issues they have in managing intellectual property issues within their partnering and co-development activities. What issues are you seeing and do you have any advice on how companies should approach this within their co-development efforts?

Chesbrough: There was an article in Business Week just re-cently on this very topic. IP management is a critical skill that must be mastered to prosper with open innovation, because whether you are bringing external technology inside or taking unused internal technology outside, IP figures prominently. The problem is that the traditional processes used to manage IP are anchored in a closed innovation approach, where control is everything. Very few technology partners will give you complete control over all of their IP in a development arrangement. Instead, you’ll need to discuss who has what rights and what access to each other’s IP, both during the partnership and after its termination. These require new legal and negotiating skills.

The companies I know who have embraced open innovation tell me that their first such deals are very painful to negotiate. But they also tell me that it gets better the second and third time around. The very best companies have developed processes and tools that take the lawyers out of the day-to-day loop and let the business parties negotiate within well-defined parameters.

Docherty: In your new book, you talk about the growing role of intermediaries in the open innovation marketplace. As companies become more proficient at both scouting and co-development, will this need for intermediaries decline or increase and why?

Chesbrough: The function of the intermediary is here to stay, I think. While it is good for companies to develop their own processes and skills, intermediaries will be able to serve a much broader market than most companies. They will be more active participants in the market and will have better knowledge on what deals are being done with what arrangements. Only the very biggest companies can replicate this internally. The rest will be well-advised to team up with intermediaries. And some of the very largest organizations, like P&G, have taken equity positions in some of the leading intermediaries, like NineSigma, InnoCentive, Yet2.com, and YourEncore.

Henry Chesbrough is Executive Director of the Center for Open Innova-tion at the Haas School of Business, University of California Berkeley. He was named as one of the Scientific American Top 50 Business and Tech-nology leaders for 2003. Michael Docherty is Visions Open Innovation Editor and President of Venture2 Inc., located in Delray Beach, Fla.

“The companies…who have embraced Open Innovation tell me that their first such deals are very painful to negotiate. But…it gets better the second and third time around.”

—Henry Chesbrough


Arizona Chapter conference focuses on sustainability—Speakers stress the “greening” of product development

Donovan Ray Hardenbrook, Senior Internal ConsultantIntel Corporation ([email protected])

Donovan Ray Hardenbrook


On March 9, 2007, the Arizona chapter hosted its third an-nual Product Development and Management Association (PDMA) conference. Attended by over 50 registered par-

ticipants, this year’s conference focused on a topic that is now catching the attention of businesses and the media alike; its theme was Innovate through Sustainable Technologies. The intent of this year’s conference was to showcase some of the emerging trends in sustainability across several industries. In addition, we looked at what was driving voluntary compliance in the personal computer (PC) industry and the efforts in China to address sustainability in the world’s fastest-growing manufacturing economy.

Conference planningPlanning for the 2007 Annual Conference started immediately

after the 2006 Annual Conference. The convergence of several thought-provoking books, particularly China, Inc. by Ted Fish-man, The World is Flat by Thomas L. Friedman, and most visibly

An Inconvenient Truth by Al Gore, highlighted the fact that not only is the world getting flatter but it is also getting environmen-tally dirtier. A conference showcasing companies in various industries that are making a more conscious effort corporately to im-prove their environmental footprint through product

innovation was something worth pursuing.We formed a conference planning committee consisting of

individuals from Arizona PDMA (Chapter Board members Asit Goel, Peter Miller, Pete He, Glenn Grossman, David Zuckerman, and Don Hardenbrook), Arizona State University (Dan Shunk, Braden Allenby, Jay Golden, Jim Hershauer, and Prasad Bora-kar), and the China-U.S. Center for Sustainability (John Potts). Several sessions spent discussing sustainability started drawing out the vastness of the subject. We agreed that the focus would be on product development and what companies are doing in the area of sustainability.

This year’s event was kicked off by an invitation-only pre-con-ference panel discussion consisting of the conference speakers and hosted by Dial Corporation, along with its parent company, Henkel Corporation. Jay Golden, Director, National Center of Excellence on SMART Innovations for Urban Climate and Energy at Arizona

As corporate interest in sustainability has mushroomed in the United States, more and more companies are figuring out how to “go green” in their product development efforts, not just their facilities. The author describes the Arizona Chapter’s recent conference on sustainability.

State University, was the moderator for the panel. Some very lively interaction took place between the audience and the panelists as different views on sustainability and industry trends were shared. One very important theme was the need for more awareness by senior management on making sustainability an important part of business strategy and senior management commitment.

The u.S. Center for Sustainable DevelopmentThe first presenter for the conference was John Potts, CTO for

the China-U.S. Center for Sustainable Development (CUSD). China has become the global source for manufacturing. Unfor-tunately, this designation also places China as the second-largest contributor to the global warming problem (behind the United States), he pointed out. Statistics such as 10,000 new towns and 300 million homes to be built in China in the next 15 years put into perspective the costs to the environment caused by economic growth. Whatever solutions are developed for sustainability will need to be embraced by the People’s Republic of China in order to have any significant effect.

The CUSD has been designated by the United States govern-ment to be the official agency to work with China on sustainability. The CUSD not only has government representatives from the People’s Republic of China but also Chinese industry associations and universities (Beijing, Tongji, and Tsinghua Universities). Last but most important, an elite list of multinational corporations such as Ford, HP, Intel, British Petroleum, and Philips hold invited positions on the board and are recognized as global leaders in environmental and social responsibility. Through the CUSD, said Potts, the Chinese government has been open to best prac-tices and thought leadership from industry leaders on defining a “cradle to cradle” approach to its economic and environmental development.

The growth engine of the past century was the corporate en-terprise. This same growth engine will be essential to our future for well-designed, sustainable solutions. Technology, and its application to sustainability challenges, is a major component of China’s plan to address the country’s challenges. Potts also theorized that sustainability will mimic the quality revolution. The lessons learned in quality need to be applied to accelerate sustainability efforts.

Doug Kunneman and Robert Green of NatureWorks LLC, a subsidiary of Cargill, presented a session on the NatureWorks Polymer (PLA). One of many new biopolymers on the market, PLA is used to create packaging products that are 100 percent biodegradable. In fact, PLA will completely decompose in 47

“ [There is a]… need for more awareness by senior management on making sustainability an important part of business strategy.”


2�JUNE 2007PDMA Visions MAgAziNE

days. Over 114 million product containers have been created with PLA so far. With the raw material for PLA found in corn, the solution is 100 percent renewable, with many end-of-life options. The conclusion was that PLA, a renewable carbon-based solution, is a better environmental alternative to petroleum-based plastics. Kunneman gave away a copy of Al Gore’s An Inconvenient Truth DVD that used PLA in its packaging.

Philips, a company with a long history of sustainabilityFrom the company’s formation, Royal Philips Electronics has

always been concerned about sustainability. The concept of “do-ing well by doing good” was a core virtue of Anton and Gerad Philips, the founders of Philips back in 1891. Philips takes the approach of embedding sustainable practices in its business units. It is more than a semiconductor company with businesses in light-ing, health, and lifestyle.

Govi Rao, Vice President & General Manager, Philips Solid State Lighting, North America, stated that 19 percent of an elec-tric bill is related to lighting. Individuals can do a lot today with improved choices for lighting to reduce energy consumption, including use of compact fluorescent and LED bulbs. Unfortu-nately, consumers in the United States are reluctant to switch from incandescent bulbs due to their “warm, golden glow”; ac-cording to Rao, they are essentially “ceiling heaters.” He was proud of the fact that Philips recently announced that it is getting completely out of the incandescent light bulb business. There will be a transition over time so as not to impact the economies of countries that manufacture incandescent light bulbs for Philips. Rao also pointed out that compact fluorescent lamps, while a better alternative to incandescent ones, are still not the best solution due to the chemical mercury contained in the bulbs. For that reason, Philips is investing in white LED bulbs and other more ecologi-cally friendly alternatives.

Wayne Rifer from the Electronic Product Environmental As-sessment Tool (EPEAT) organization shared information about the role of EPEAT in helping institutional purchasers of PCs and displays who want to ensure that they were designed with energy efficiency and environmental ecology in mind. The design of EPEAT was based on collaboration with PC original equipment manufacturers (OEMs) and is a voluntary compliance with respect to the certification standards. A PC product can be certified as bronze, silver, or gold depending on the number of the EPEAT required and voluntary criteria it meets. The power behind EPEAT is that all U.S. government purchasing departments are required

to meet environmental standards as part of their selection process, and EPEAT allows them an efficient and credible means of verify-ing that equipment meets criteria. Given that there was over $21 billion in total federal and state IT budgets as of March 31, 2006, PC OEMs can not ignore making sure their equipment meets EPEAT standards. There are now over 300 PC and computer display products listed on the EPEAT Web site (www.greenelec-tronicscouncil.org/epeat/index.htm). EPEAT has proven to be so successful that the Green Electronics Council has been asked to expand EPEAT to more consumer products.

Applying green thinking to manufacturingFrom Intel Corporation, Todd Brady, Corporate Environmen-

tal Manager, presented on the concept of green manufacturing by sharing how Intel approached reducing the environmental footprint of its manufacturing facilities as it transitioned from 200mm to 300mm wafer factories. Using a holistic design for environment approach, Intel was able to reduce its chemical and utility consumption and its environmental emissions significantly for the 300mm wafer manufacturing facilities compared to the 200mm factories. Much of this success was attributed to the envi-ronmental, health, and safety organization getting involved early in the technology research associated with wafer manufacturing and influencing the facility construction and manufacturing pro-cesses to be more environmentally friendly. An interesting note: Because Intel’s factories are designed the same regardless of the country of location—an Intel practice commonly known as “Copy Exactly”—all factories comply to the strictest environmental requirements of the most stringent countries, even though not required by the local government.

A growing sustainability community in ArizonaOur major sponsors, Arizona Public Service, Arizona State

University, and Henkel Corporation, have made significant investments in sustainability. Arizona State University recently opened the Global Institute of Sustainability (GIOS). Henkel was this year’s major corporate sponsor. Dial also sponsored the pre-conference panel discussion on sustainability moderated by Jay Golden of Arizona State University, held at the Scottsdale Princess Hotel.

In summary, we hope that the 2007 Conference provides ad-ditional momentum to sustainability efforts and encourages other companies to understand that sustainability is no longer for “tree huggers” but has become a platform that companies will need to compete on in today’s flatter world.

Donovan Ray Hardenbrook is a Senior Consultant at the Intel Corporation in Arizona and also the former president and a founding member of the PDMA Arizona Chapter.

endnotes1. Ted C. Fishman, China Inc.: How the Rise of the Next Superpower Challenges America and the World (New York: Scribner, 2005). 2. Thomas L. Friedman, The World is Flat: A Brief History of the Twenty-first Century (New York: Farrar, Straus and Giroux, 2005. 3. Al Gore, An Inconvenient Truth: The Planetary Emergency of Global Warming and What We Can Do About It (New York: Rodale, 2006).4. An Inconvenient Truth, dir. Davis Guggenheim, 96 min., Paramount, 2006, DVD.

PDMA Arizona Chapter board members are shown here (left to right): Don Hardenbrook, Past Chapter President; Asit Goel, Chapter President; Peter Miller, VP Conferences; Pete He, VP Membership; David Zuckerman, VP

Marketing; Glenn Grossman, President Elect.


“ China may become the ‘mini vehicle kingdom’ of the world in 10 years.”

China’s automotive industry represents an extraordinary case study of the development of an emerging market. Its central lesson underscores the need for innovation to sustain the

Chinese economy. China is fast transitioning to a full market economy. A number of key forces are now playing out in China, among them the high potential the Chinese market represents for global companies, a large number of economic and industrial reforms implemented by the government, and the growing reli-

ance of Chinese industry on imported technology to maintain its manufactur-ing edge. With this sce-nario unfolding, the First International Conference on Automotive Industry

Innovation was held in the historic city of Wuhan in the People’s Republic of China on December 1-3, 2006.

The of the conference was China’s Automotive Innovation and Independent Development. Its goal was to create China’s premiere forum for discussion on how to guide China’s automotive industry

Report from China

Wuhan Conference examines the need for innovation in China’s automotive industryRaja Irfan Sabir, Ph.D. Candidate, Wuhan University of Technology, Wuhan, Hubei, People’s Republic of China ([email protected])

Today, automobile makers in the People’s Republic of China face a crisis in innovation as they try to move past their dependence on outside technology and ramp up to compete in a vast and rapidly growing market. To address this challenge, PDMA-China and Wuhan University of Technology, with other sponsors, held a conference in December 2006 on New Product Development (NPD) in the automo-tive industry. Here are some highlights.

Raja Irfan Sabir

Global news

to mature growth through innovation. The conference was a joint effort of the Product Development and Management Association (PDMA), PDMA-China, and Wuhan University of Technology. The conference was co-chaired by Hu Shuhua, Chair Professor, Wuhan University of Technology, and Hamsa Thota, President and Chairman, PDMA.

Attendees included executives from local and foreign compa-nies, researchers, news reporters, and students of management and the engineering sciences. Speeches were delivered on the first and second days, with two sessions on each day, while the last day was filled with open forums and discussions in which experts, researchers, and scholars exchanged their views and ideas.

envisioning the move toward innovationThe conference started with welcoming remarks from Hu

Shuhua in which he gave an overview of the conference theme. He also invited all of the guests to what proved to be an inspirational exhibition of some of the new vehicles (including mini cars and electric cars and vans) being manufactured in China.

The formal morning session started with Hamsa Thota’s speech,

The People’s Republic of China Automotive Industry

Nearly seven million automobiles were sold in China in 2006, making it the second-largest market in the world. One projection puts the number of automobiles on Chinese roads by 2020 at 140 million—more automobiles than the United States has today.

That prediction may not be surprising, given the size of China’s present population of 1.3 billion. Major Chinese auto manu-facturers have set up joint ventures with foreign companies to take advantage of this large market. Some say that this foreign direct investment has reduced the incentive for in-digenous Chinese technological innovation in the automobile industry. Today, however, the government and others are trying to reverse that trend, and the conference held in Wuhan last December is part of that effort.

Although most of the models produced by China’s domestic car produc-ers have come from joint ventures with foreign manufacturers, two of China’s local independent brands, Anhui-based Geely and Zhejiang-based Chery, are starting to have an impact.

—Andrea Herbert, Staff Writer


in which he, as PDMA’s President and Chairman, congratulated all those who participated in organizing such a successful conference. Briefing the attendees about the automobile industry, he said that it “has tremendous opportunity to innovate across all three dimen-sions of innovation to deliver superior customer experiences.” He went on to suggest that the Chinese automotive industry should direct its course toward innovation in two steps. The first step is to differentiate by investing in the four stages of process innova-tion— discovery, development, commercialization, and lifecycle management. The second step is to differentiate across the seven types of business innovation—customer segment, distribution channel, core capability, customer relationship, partner network (ecosystem), cost structure, and revenue model.

The importance of hybrid vehiclesKeynote speeches were delivered by researchers, scholars, and

executives from local and foreign companies. Kelvin Wang, Direc-tor GE Global Research, Shanghai, commented about automobile industry trends. He noted that the industry is facing overcapac-ity and fierce global competition, along with the requirement to meet customer needs that are becoming ever more personalized. Also having an impact are rising costs for raw materials and fuel. Based on these circumstances, he believes that the only companies that can win will be those that use technology to produce new energy/hybrid electric vehicles (HEVs), plug-in HEVs, and new materials of less weight and lower cost.

One academic presented basic facts about the Chinese automo-tive industry, highlighting its general situation, its deficiencies and problems, and the current status of Chinese independent automotive innovation. He had the following advice for enhancing the innovation capabilities of the Chinese automotive industry: “The Chinese auto industry should: (1) Set up a scientific evalu-ation system of independent innovation ability, (2) Strengthen auto talent training, (3) Improve the core competition ability of independent automotive brands, (4) Construct innovation systems and public platforms, and (5) Improve the core competition ability of key parts manufacturers.”

Several other speakers followed, giving their points of view about Intellectual Property (IP) management, the current status and development of an independent and innovative Chinese automotive industry, development of the electric automobile industry, and more.

Innovation in auto electronics key to growthThe second day’s sessions began with a speech on “Auto Elec-

tronics and Innovation” by Dr. Ronald Busch, President and CEO, Siemens VDO Automotive, Asia-Pacific & China, who stated that “today, auto electronics is one of the most important factors in the auto industry. Automotive-specific trends include sustainable mobilizing, increasing safety and comfort, and seamless con-nectivity.” He referred to the following as the important elements of innovation for the near future: invention and idea generation, development, industrialization, sales and marketing, profitable turnover, and better quality of life/harmonious society.

Another scholar presented his research on Mini Vehicle and Indigenous Innovation of SGMW (SAIC-GM-Wuling Automobile Co., Ltd.), describing the market opportunities and challenges for the development of mini vehicles in China. He concluded with the prognostication that “China may become the ‘mini vehicle kingdom’ of the world in 10 years.”

Hu Shuhua of Wuhan University of Technology highlighted the following facts about the Chinese automotive industry in his speech: The number of cars sold per annum increased from 2 mil-lion in the year 2000, to 5 million in the year 2004; and the exports of the Chinese automotive industry have also increased, from 2,000 cars in the year 2000, to 140,000 cars in the year 2004.

According to the views of experts and researchers from all over the world, he said, China is now entering a new stage, that of an “innovation-driven” country. China has all that is required for a country to develop its automotive industry and become in-dependent. To make use of this potential, the Chinese automotive industry requires “Indigenous Innovation.” “Experience shows,” he added, “that all of the developed countries had adopted the fol-lowing three stages of development.” This is how he outlined that development: First, countries import finished/ready-to-use goods; secondly, they produce those goods internally by importing foreign technology; finally, they develop those goods internally within the country itself through their own development ef-forts. “And if the same pattern is followed appro-priately,” he said, “China would be able to develop its independent automotive industry efficiently and effectively.”

Concluding his speech, Hu Shuhua proposed that the Chinese government build a National Automotive and Innovation Project (NAIP) to help in the development of the Chinese automotive industry through independence and technical innovation. To implement the NAIP, he suggested the following three-stage framework: (1) Government support—The Chinese government should focus more on the automotive industry, as compared to other industries, and establish a separate department to work on NAIP; (2) Development of two necessary platforms—a Manage-ment Innovation Platform and a Technology Innovation Platform; and (3) Development of new-generation vehicles.

Food for brainstormingAt the evening session, held in the School of Management Sci-

ences, Wuhan University of Technology, academics and students of management gave some interesting presentations, which also showed the students’ enthusiasm toward innovation, its tools, and its effective management in today’s rapidly changing and highly concentrated markets. Because the conference theme was a new concept to most of the attendees, they were anxious to learn about innovation and its implications for the automotive industry in China.

The conference ended on the third day with open discussions and visits to some of the beautiful locales in Wuhan. Overall, the conference proved a success, giving the attendees new ideas regarding automotive industry innovation in China and provid-ing a forum to brainstorm about them. It also left participants still wrestling with some core questions about how China should develop its automotive industry in the future. These questions will form a good basis for discussion in future conferences.

Raja IrfanSabir is a Ph.D. candidate at Wuhan University of Technology, Wuhan, Hubei, People’s Republic of China.

“ To make use of this potential, the Chinese automotive industry requires ‘Indigenous Innovation’.”


Each year the PDMA UK/Ireland affiliate holds a workshop to receive the benefit of research done by its academic member-ship. The affiliate held its fourth workshop, “Researching

and Making Sense of Creativity,” on January 18, 2007, at the Man-chester Business School, University of Manchester, Manchester, U.K. Aimed at examining the role of creativity in collaborative New Product Development, the workshop was co-funded by the Arts and Humanities Research Council (AHRC).

Drs. Helen Perks and Pammi Sinha, co-chairs of the workshop, welcomed 39 delegates from a variety of disciplines and institu-tions across the United Kingdom, Ireland, and

Europe. The universities included Manchester, London, West-minster, Cranfield, Salford, Nottingham, and Groningen. This thought-provoking and lively event focused on current methods used to research creatively. A major theme running through the discussion was that there is a need for a multi-disciplined and collaborative approach to researching creativity.

Methods and approaches in the psychology of creativityProfessor Ken Gilhooly of the School of Psychology, University

of Hertfordshire, Hatfield, U.K., began the workshop by discuss-ing three main psychological approaches and methods used in the study of creativity. He noted that there were many ways to research creativity; each approach focused on a different aspect and used different methods for different problems.

Evaluating cognitive processes typically involves experiments with verbal protocols and think-aloud tasks. These methods may interfere with a person’s insight, which requires unconscious thought processes that cannot be verbalized. Assessing individual differences involves the use of psychometric tests and the ‘big five’ personality factors (neuroticism, extraversion, openness, agreeableness, conscientiousness); and those methods can result in over-generalizations about the study population.

Gilhooly concluded with the analogy of the “blind men and the elephant problem” based on an old Indian fable where each

person comes up with a different understanding because each contacts only one part of the elephant. The story reflects the need for a combination of approaches in order to obtain a more comprehensive and accurate understanding.

Methodology selection in design studies Dr. Claudia Eckert of the Engineering Design Center, Depart-

ment of Engineering, The University of Cambridge, Cambridge, U.K., discussed her personal experience in examining the design process in general and creativity in particular with designers of knitwear and helicopters.

Eckert noted differences in creativity between experts and novices. She also discussed her observation that design behavior remained similar across disciplines, even though the actual activi-ties and complexities of the projects differed.

Eckert concluded by discussing her rationale for selection of research methods. The method selected depends upon the situa-tion and research question, the expectations of the research peer groups, and the researcher’s self-awareness (e.g., how easily you build relationships with people, how well you pick up on cultural references, how much you enjoy detailed analysis), and the ex-pectations of the research peer group.

Dr. Martin Stacey, School of Computing, De Montfort Univer-sity, Leicester, U.K., described the complexity of researching the design process as a “multilevel process.” He identified a number of ways of looking at design and creativity, such as cognitive psychology, artificial intelligence, sociology, soft systems, and ethnography. Stacey argued that the main problem with research-ing creativity currently is that there are no set criteria across disci-plines to judge which theories and models are supported or refuted. Additionally, comparisons between conceptual frameworks have focused on criticisms rather than synthesis.

Stacey discussed work that he and Eckert conducted about the fashion industry. Designers work in the continuously shifting context of current trends. A fundamental question was where the context originates. In the fashion industry, trends can come from the designers, magazines, forecasting bureaus, retailers, and consumers. Although consumers do not directly influence trends, sales figures will direct companies. Designers, however,

Spotlight on UK/Ireland

PDMA affiliate holds workshop on creativity in product developmentAttendees discuss a variety of challenges

Pammi Sinha, Ph.D., Newsletter and Membership Coordinator for the UK/Ireland Chapter and Program Director for BSc Hons Fashion and Textile Retailing, University of Manchester, Manchester, England ([email protected]) and Tricia Sutton, PMP, NPDP, Visions Chapter Spotlight Editor and President, Sutton Enterprises Inc. ([email protected])

Creativity is assumed to be critical to the field of New Product Development (NPD). However, few understand its role well enough to improve the creative process or foster creativity in development teams. In a workshop early this year, the members of PDMA’s UK/Ireland affiliate debated this question. The discussion centered around the findings of recent research on NPD creativity.—Tricia Sutton, Chapter Editor

Tricia Sutton

Global news

“ This thought-provoking...event focused on current methods used to research creatively.”

Pammi Sinha


primarily follow each other, which raises questions about the roles of individuality and collective creative processes in com-mercial design.

Creativity in engineering design teamsDr. Jan Kratzer, Assistant Professor for Business Development

and Strategy, Department of Business Development, School of Management & Organization, University of Groningen, Gronin-gen, The Netherlands, explained that as project or team autonomy increases, one needs to examine creativity within a team context and the network of knowledge exchange. Kratzer’s research looked at team leaders and the social structure of leadership.

Kratzer described the role of the team leader on a continuum between peripheral (not very hands-on) to central to the team’s activities, engaged in the minutiae of the team’s activities. He examined measures of creativity and interviewed teams and their team leaders about issues, such as how they communicated and their perspectives on creativity within teams.

Kratzer defined some general guidance on the role of team leader. Team members should be promoted to team leader roles based on their managerial ca-pabilities rather than on professional expertise. The ability to span boundaries was very important at all levels, and the team leader needs to make sure that all members are involved with external networks. A team leader’s involvement in problem-solving should be kept to a minimum, and the leader’s involvement in the day-to-day activities of the team should be moderate.

Why brilliant ideas trigger illegitimate acts Dr. Babis Mainemelis, Assistant Professor of Organisational

Behaviour, London Business School, London, U.K., discussed how creativity research has focused on idea generation—not social evaluation. Noting that creativity literature often examines climates that promote creativity, he pointed out that creative ideas emerge even in unsupportive climates. The reasons for why and how this happens within organizations may be explained by a number of factors: intrinsic motivation, a love of the work itself; persistence; nonconformity; openness; and the individual’s cre-ative identity (the creative adventure). Organizations may respond to this rule-breaking behavior in a number of ways, from funda-mentally shifting their perspective to organizational tolerance of creative deviance.

Some of the implications of Mainemelis’ research were that social evaluation is an integral part of creativity; the idea origi-nator is part of the social evaluation process, which is a fluid, unpredictable, and unfolds over time; work climates that promote autonomy and diversity also promote rule-breaking behavior; and creativity-relevant traits influence creativity through social behavior. Creativity-relevant traits are traits commonly found in persons acknowledged to be creative.

Implications for product developmentAfter the individual presentations, the delegates and speak-

ers discussed the many issues that were raised. While the need for a combination of research methods was acknowledged, the

question remained of how to obtain cross-disciplinary agreement on the criteria for rigor. Although there is no objective measurement for creativity, there are methods used to quantify it (e.g. counting the number of new ideas).

Dr. Kratzer’s research did not find significant dif-ferences between team members’ and team leaders’ perspectives on creativity. Gender differences in cre-ativity and complex technical teams were difficult to comment on, though, because the teams investigated were mainly composed of men.

An overarching question also remains: If management style has an effect on creativity in a team, does creativity in teams also have an effect on the manager’s style?

While there are still many questions and opportunities for further research, the delegates came away with a bet-ter understanding of factors that may influence creativity and methods to further understand creativity. They also came away with recommendations to focus future research as well as some early results to build their teams’ creativity.

Pammi Sinha, Ph.D., leads newsletter and membership efforts for the UK/Ireland Chapter and also is Program Director for BSc Hons Fashion and Textile Retailing, University of Manchester, Manchester, England. Tricia Sutton, PMP, NPDP, is Visions Chapter Spotlight Editor and President of Sutton Enterprises Inc., Waukegan, Ill.

The UK/Ireland affiliate is unique in many ways. For one, it has the honor of being the Product Development and Manage-ment Association’s first international affiliate, founded in the late 1990s. Second, it encompasses two countries divided by the Irish Sea.

The large area and geographic constraint add interesting chal-lenges and opportunities, as well as provide a diverse set of interests. The affiliate’s steering committee is spread across the two islands. Obviously, it is easier for the committees to organize events in their local areas; but the affiliate has consistently sponsored affiliate-wide conferences and events each year.

Over the past 15 years, affiliate membership has grown to over

Hats Off to uK/Ireland Chapter—PDMA’s First International Affiliate500. Most practitioner members are industry-based, but the affiliate also has a healthy academic membership of over 100 people who come together at an annual workshop, typically held in January. The theme of the annual workshop varies and provides members an opportunity to present their current research and share it with oth-ers in the field. Many collaborative papers have resulted from this networking opportunity.

The chapter also hosted two successful international conferences in London in 2001 and 2002 and continues to hold workshops and events throughout the United Kingdom and Ireland. The affiliate’s Web site is www.pdma.org/uk.

“ Creative ideas emerge even in unsupportive climates.”


PDMA Global Innovation Thought Leader Panel presents recommendations

Brian Christian, President, DASO Consulting LLC ([email protected]) and Hamsa Thota, PDMA President and Chairman of the Board and Founder, Innovation Business Development ([email protected])

As globalization pushes forward, PDMA has taken time to develop a new mandate. The Board of Directors created a special panel to do so. In this article, two members of the panel describe its recommendations and how they will help PDMA achieve its goal of “Connect-ing Innovators Worldwide.”

The Product Development and Management Association (PDMA) is in the process of transforming itself from a North American-centric organization into a global association

with the mandate of “Connecting Innovators Worldwide,” as the association’s new tagline points out.

The new PDMA mission is to champion development and dis-semination of the best in New Product Development (NPD) and management knowledge throughout the global community, thus enabling people and businesses to grow and prosper through in-novation and management of new products for world markets.

PDMA creates new panelSeveral years ago, PDMA members were asking how the as-

sociation should innovate to achieve this new mission. To get broader, expert advice, PDMA created a special panel in August of 2006 to assist the Board of Directors in creating a new strategic

framework for innova-tion. The purpose of this framework would be to help PDMA define its own role with respect to innova-tion. Because the needs of PDMA members and customers have evolved

from their traditional focus on product development to the broader requirements of innovation, the Board felt that it was important for PDMA to expand its offerings to fit these new, broader needs. The implications of this new innovation role for PDMA’s entire enterprise strategy were believed to be significant.

This ad hoc panel was named the Global Innovation Thought Leader Panel. The intention was to form a body of innovation ex-perts from outside the membership of PDMA’s Board, which itself is populated with individuals having deep innovation expertise. In this way, PDMA would get the best of both inside and outside thinking engaged in this critical initiative. The ten members of the Global Innovation Thought Leader Panel are listed in the box on this page. These panel members represent industry, academia, governmental institutions, and private consulting practices. The panel held a series of teleconferences, starting in September of 2006. These sessions were led by the panel’s three consultants, in conjunction with PDMA Executive Director Robin Karol. By March 2007, the panel had arrived at a consensus around an innovation framework and set of recommendations for PDMA’s Board.

Hamsa ThotaBrian Christian

“ PDMA is in the process of transforming itself from a North American-centric organization into a global association.”

PDMA news

PDMA Global Innovation Thought Leader Panel

• Peter Beven, Director, Australia Institute of Commercialisation• Connie Chang, Resident Director

U.S. Department of Commerce• Brian Christian, President, DASO Consulting• George Day, Professor, The Wharton School• Alex Kandybin, Vice President, Booz Allen Hamilton• Umesh Ramakrishnan, Vice Chairman, Christian & Timbers• Larry Schmitt, President, Inovo• Kyle Spainhour, Vice President, Motorola• Bill White, President, DuPont Canada• Gregg Zank, Chief Technology Officer, Dow Corning

The innovation frameworkThe panel presented its innovation framework and recommenda-

tions to the PDMA Board on March 15, 2007, at PDMA’s annual strategic planning meeting in Philadelphia. Larry Schmitt, Presi-dent of Inovo and one of the panel members, presented the panel’s findings. Exhibit 1 illustrates the proposed innovation framework. This framework has provided a base for subsequent work that is ongoing. The three-dimensional model was well received by the Board, which applauded its simplicity and intuitiveness. Each of the 48 cells of the cube contains know-how relevant to that specific innovation topic area.

X-axis—Three types of innovationThe three dimensions of the cube require some definition. The

first dimension, on the x-axis, refers to the three types of innova-tion: product/service, business model, and operational. These three types are intended to capture the full range of focus areas for innovation in which organizations might engage. Product/service innovation is the most commonly known variety and refers to in-novation in the basic offering provided to the customer. Business model innovation is a little less intuitive and refers to innovation in the way in which a particular product or service offering cre-ates value. Operational innovation relates to innovation in the way internal practices, processes, and tools are designed, often with the intent to improve effectiveness or efficiency but also with the potential to increase value received by the customer.


Y-axis—Stages of innovationThe second dimension, on the y-axis,

refers to the stages of innovation. These four stages—discovery, development, commer-cialization, and lifecycle management—are intended to capture the full life cycle of prod-uct development from discovery through end-of-life retirement.

Z-axis—Building blocks of innovationThe third dimension, on the z-axis, refers

to the building blocks of innovation. These four building blocks—strategy, organization, process, and knowledge—are the elements that any organization must address to build a sustainable innovation capability.

This innovation model allows PDMA to define its traditional innovation scope as well as its desired innovation scope going forward. Specifically, the traditional focus of PDMA has been product/service innovation in terms of type of innovation. The traditional focus in terms of stage of innovation has been mostly development and commercialization but with strong offerings also in discovery and some coverage of lifecycle management. In terms of the building blocks axis of innovation, PDMA has traditionally focused on all four areas, though process has clearly been a priority.

The recommendationsThe panel offered three primary recommendations: First, it

suggested that the Board accept the proposed innovation model. Second, it recommended that the Board undertake an innovation initiative to reinvent itself, following the same processes and using the same tools that it offers to its members and other customers. In other words, the panel’s suggestion was “Doctor, heal thyself.”

Third, the panel rec-ommended a Voice of the Customer (VOC) study to better under-stand the current and future needs of its mem-bers and other custom-ers. In other words, the third recommendation

simply emphasized the need to get the innovation process started in the right place—with the customer. More specifically, the panel recommended going beyond written surveys with multiple choice questions to undertake a deep dive qualitative study of current as well as future customers. The panel felt this type of study might enable PDMA to understand more fully how best to serve the interests of members—and potential members—and capture the valuable nuggets of insight that lead to innovative solutions. This customer knowledge will be used to help define the appropriate innovation scope for PDMA going forward. It will also be the fuel that will feed the next stage of the innovation process, the idea creation stage. The innovation landscape is rapidly changing; and if PDMA wants to be an important part of this landscape in the future, it must understand its customers better and more deeply than other organizations that offer the same or similar services.

“The panel recommended…a deep dive qualitative study of current as well as potential future customers.”

The path forwardThe response to these recommendations by the PDMA Board

was extremely positive. The Board accepted all three of the panel’s recommendations. It adopted the proposed innovation model as the foundation for its innovation efforts going forward. It also accepted the need to execute an innovation process to identify new products and services for its customers, and perhaps even develop a new busi-ness model. Finally, PDMA understands the need to under-take a VOC process as the next stage in this innovation initia-tive. Appropriately, PDMA planned to begin this VOC study at the PDMA/IIR Front End of Innovation Conference in early May in Boston.

Clearly, these recommendations are only a start. They set the stage for a great deal of work in the future. PDMA is, however, committed to evolving its role to meet the expanding innovation needs of its members and other customers. After all, if PDMA is to be an effective advocate for innovation and for its members, it must deeply understand its customer base and continuously spawn innovation in its own offerings. The vision that the PDMA Board has for the organization is that it be an example of innovation to its entire customer base.

The Board offers its sincere gratitude to all members of the Global Innovation Thought Leader Panel for their time and commitment in helping PDMA begin this important innovation journey.

Brian Christian is Founder and President of DASO Consulting LLC, located in St. Joseph, Mich. Hamsa Thota is President and Chairman of the Board of PDMA. He founded Innovation Business Development Inc., St. Simons Island, Ga. Both are on the Global Innovation Thought Leader Panel.

Exhibit 1: New PDMA Innovation FrameworkProposed by the PDMA Global Innovation Thought Leader Panel

SOURCE: PDMA Innovation Thought Leader Panel

“ These recommendations... set the stage for a great deal of work in the future.”

�0 JUNE 2007 PDMA Visions MAgAziNE

PDMA International ConferenceInnovation Connection 2007Orlando, October 1-2, 2007

This year, PDMA has reinvented The International Conference to provide an un-matched environment for NPD professionals to gather and learn from some of the smartest minds in the space.

Join an intimate dialogue with Keynotes and Gurus @ Gurus@Play™Experience a fresh approach to innovation challenges @ Innovation on DemandLearn the latest tools for creating a sustainable product development process @ Tool Story Hear a debate about the most controversial concepts in innovation @ Hot TopicsArrive early and learn the latest academics’ findings @ Research ForumStay late for deep dive learning of key methodologies @ Workshops

Special programming has limited seating. First come first serve.Register and secure your place at: www.pdma.org/2007visions

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�1JUNE 2007PDMA Visions MAgAziNE

PDMA International ConferenceInnovation Connection 2007Orlando, October 1-2, 2007

This year, PDMA has reinvented The International Conference to provide an un-matched environment for NPD professionals to gather and learn from some of the smartest minds in the space.

Join an intimate dialogue with Keynotes and Gurus @ Gurus@Play™Experience a fresh approach to innovation challenges @ Innovation on DemandLearn the latest tools for creating a sustainable product development process @ Tool Story Hear a debate about the most controversial concepts in innovation @ Hot TopicsArrive early and learn the latest academics’ findings @ Research ForumStay late for deep dive learning of key methodologies @ Workshops

Special programming has limited seating. First come first serve.Register and secure your place at: www.pdma.org/2007visions

••

•

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T his edition of From Blogs to Books is short. We only have room to discuss two books—a “must-have” for the new product professional who is regularly addressing multiple

external and internal constituencies; and a book that looks at the true impact of China and India on Information Technology (IT) and innovation overall.

Made to Stick: Why Some Ideas Survive and Others DieBy Chip Heath and Dan HeathRandom House, January 2007, 304 pages

Among the important questions answered in this book are: “What are the qualities of ideas that really ‘stick’?” “How does truly communicating differ from sharing data?” And “What’s ‘The Curse of Knowledge’?” Made to Stick pulls together research in memory and emotion with key learning from, among other cases, those persistent urban legends that we’ve all heard. The brothers Heath have distilled the key principles into a helpful mnemonic (“SUCCES” for Simple, Unexpected, Concrete, Credible, Emo-tional, Stories) and make it clear that using these principles will help your ideas be more “sticky.”

This approach works, they assert, because it helps you as a message crafter to overcome “The Curse of Knowledge,” the simple notion from psychology and economics that the more we understand something, the harder it is to place ourselves in a position of being naïve to it—we simply can’t remember what it was like not to know it, and thereby underestimate the need to provide enough cognitive and emotional hooks for others to grasp it. The authors point out that we are on the receiving end of “The Curse of Knowledge” anytime we’re talking to IT support (apologies to all readers in IT!), and in doing so, effectively help us grok the concept by using Simplicity, Concreteness, Cred-ibility, perhaps at least some Emotion and a Story that we might all be able to share.

Do yourself a favor and at least browse through this book the next time you’re in a bookstore, and check out a handful of podcast interviews with the authors (HBR IdeaCast, Social Innovation Conversations, etc.). Worth your consideration.

IT and the east: How China and India Are Altering the Future of Technology and InnovationBy James M. Popkin and Partha IyengarHarvard Business School Press, April 2007, 226 pages

From the publisher:“The center of gravity in the technology world has shifted east.

Today, India and China are churning out some of the world’s best-trained computer science and electrical engineering gradu-ates. In both countries, consumer classes and domestic markets for technology have ballooned. Western high-tech firms are increasingly sourcing their products’ assembly from India and

From Blogs to Books

Two resources for NPD professionals

Adam Hansen, Visions Resource Editor and Creative Process Consultant, Ideas to Go, Inc. ([email protected])

Adam Hansen

China and the innovation that drives those products. Meanwhile, indigenous Indian and Chinese companies are creating intellec-tual property and innovations that will compete with those same Western companies.

“In IT and the East, James M. Popkin and Partha Iyengar ex-amine the vital questions these developments raise: What’s the long-term impact of high-tech outsourcing? How will innovation be managed in the future? Can Western firms compete in Asian markets while protecting key intellectual property? Will the in-novation engine inexorably shift east? What would such a shift mean for Western countries currently driving innovation? The authors also discuss the emerging alliances between Indian and Chinese technology companies and outline the implications for Western businesses.

“Filled with extensive interviews with high-level executives, government officials, and academics from around the world, IT and the East is the first book to articulate the challenges that new business scenarios and capabilities in India and China pose for Western technology firms.”

PDMA news

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��JUNE 2007PDMA Visions MAgAziNE

The Journal of Product Innovation Management (JPIM or the Journal) is well over 20 years old and is still going strong. With that milestone in the past, it was time to look back

and see how the Journal, and indeed the academic discipline of product innovation itself, has matured. As these things go, it is still a young discipline, and we have witnessed its evolution thus far in the pages of JPIM.

The May 2007 issue opens with an article that will be of special interest to our academic readership: It is a retrospective on JPIM written by Wim Biemens, Abbie Griffin, and Rudy Moenaert. They document JPIM’s development over its first 20 years and comment on its impact on the academic community in term of knowledge stock and flow. They examine, for example, the use of academic sources by JPIM authors, as well as the use of JPIM articles by authors writing for other journals.

Though we could do better in some ways (we ought to be bet-ter cited in the strategy and management literature, for example), JPIM has clearly established itself as the leading journal in the growing area of technology innovation management.

Also appearing in the May 2007 issue is a Perspectives article by Jeff Thieme, who uses a social capital perspective to examine the contributions made by the most-published academic researchers in the area of innovation management. Many of the names he cites will be familiar to our regular JPIM readership. Taken together, these two articles are a wonderful snapshot of our journal and academic discipline at this stage in their evolution. I hope you enjoy them, and all the rest of these upcoming issues!

JPIM: upcoming Major ArticlesJuly 2007

“NPD Planning Activities and Innovation Performance: The Mediating Role of Process Management and the Moderating Effect of Product Innovativeness,” Sören Salomo, Joachim Weise, and Hans Georg Gemünden

“Which Tangible and Intangible Assets Matter for Innovation Speed in Start-Ups?” Ans Heirman and Bart Clarysse

“Does Market Orientation Facilitate Balanced Innovation Programs? An Organizational Learning Perspective,” William E. Baker and James M. Sinkula

“Development of a Design Audit Tool for SMEs,” James Moultrie, P. John Clarkson, and David Probert

“Learning to Reduce Inter-Organizational Learning: An Analysis of Architectural Product Innovation in Strategic Alliances,” Roman Grunwald and Alfred Kieser

Visions Classified Ads

is the organization that develops OPX2, the enterprise Project and Portfolio Management software solution. OPX2 is a highly flexible software system designed to meet the demanding requirements of New Product Development processes. We help our clients to achieve increased productivity by providing timely and end user specific project and portfolio information throughout the enterprise. OPX2 is in use by leading New Product Development organizations throughout the world. Visit www.planisware.com to learn more.

From the Editor of JPIM:

A restrospective of The Journal ofProduct Innovation Management

Anthony Di Benedetto, Department of Marketing, Temple University ([email protected]) and Editor of JPIM

Anthony Di Benedetto

PDMA news


2007 PDMA Officers and Board Members

Executive DirectorRobin Karol NPDP [email protected]

President and ChairmanHamsa Thota NPDP [email protected]

Vice Chairman Rich Notargiacomo NPDP

Secretary – TreasurerBob Johnston

VP Academic AffairsPeter Koen

VP CertificationJerry Groen NPDP

VP Chapter DevelopmentReudi Klein NPDP

VP ConferencesDale McIntyre

VP MarketingMark Adkins

VP PublicationsKen Kahn NPDP

JPIM EditorAnthony Di Benedetto, NPDP

Directors-at-Large Don Abraham Cecil Chappelow K.T. Connor Tom Hustad NPDP Gerry Katz NPDPCheryl Perkins Ira Uslander

PDMA Staff

[email protected]

Director of Operations Amy Williams

Association Services ManagerHenry Van Nostrand

Chapter Services ManagerMelissa Baldwin

Marketing and Conference ManagerNick Spencer

Marketing CoordinatorMeggan Runner

Further contact informationcan be found on the Officers & Staff page of www.pdma.org.

HOW TO CONTACT Visions

Subscriptions Visions is Product Development and Marketing Association’s (PDMA) quarterly magazine focused on keeping members abreast of trends and developments in the New Product Development (NPD) world and the latest thinking of product development and management leaders. All PDMA members receive print copies of Visions as part of their membership package. Subscriptions are available at $85 per year in the United States or $125 abroad. Contact Bob Fogle at [email protected] (860-350-5010).

AdvertisingMs. Henry Van, PDMAPhone: 1-800-232-5241 x1 [email protected]

Roger StevensPhone: 1-317-926-6272 [email protected]

Online VisionsA Web-based version of print Visions may be found at www.pdma.org. David Olson, PDMA Webmaster ([email protected]).

Back IssuesSingle issues: United States $25, non-United States $35; multiple copies: 10 for $200. Plus shipping. Contact Bob Fogle at [email protected] (860-350-5010).

Web AdvertisingAdvertisers have their display ads posted on the Web site in a special advertising portion of Visions online.

Reprints and Copyright PermissionPDF files of articles are available for $350. Contact Ms. Henry Van at PDMA Association Headquarters at [email protected] (1-800-232-5241 x1 or 1-856-439-9052 x1) for reprint orders and copyright permission.

Advertiser IndexJune 2007 Visions

Big Bang .................................Page 31

Classifieds .................................Page 33

eureka Ranch.............Inside Front Cover

Innovare ..................................Page 15

Innovation Focus ......................Page 7

PDMA International Conference........Page 30

PDMA Team Memberships...............Page 32

Photizo Group ...........................Page 33

Stratgyn Institute ....................... Back Cover

V I S I O N SInsights into Innovation™

Author SubmissionsE-mail me or one of our sub-editors (see our masthead) any time with your ideas or drafts. Final submissions must follow the Visions Submission and Style Guidelines, which are posted on the PDMA Web site.

—April Klimley Visions Editor-in-Chief ([email protected])

Visions Calendar and Deadlines 2007 and 2008

Authors Display ads Classifieds & Chapters

September 2007 July 16 July 23 July 30

December 2007 October 9 October 22 October 29

March 2008 January 14, 2008 January 21, 2008 January 28, 2008

June 2008 April 14, 2008 April 21, 2008 April 28, 2008

Authors’ guidelines (www.pdma.org); chapter and affiliate updates ([email protected]); advertising inquiries ([email protected]).

�5JUNE 2007PDMA Visions MAgAziNE

PDMA u.S. Chapters

ArizonAAsit Goel NPDPOptimal Strategix(602) [email protected] E-mail: [email protected]: www.pdma.org/arizona

CAroLinASMontie RolandMontie Design(919) [email protected]: www.pdma.org/carolinas

CEnTrAL TExAS (AuSTin ArEA)Dave AngelowBusiness Foundations(512) [email protected]: www.pdma.org/austin

CHiCAgoScott MillerIPDG (Integrated Product Development Group)(312) [email protected] E-mail: [email protected]: www.chicagopdma.org

CinCinnATiJoseph KormosProduct Masters(513) [email protected]: www.tristatepdma.org

DETroiTRay Parnell NPDPPhotonics NPD(586) [email protected]: www.pdma.org/detroit

gEorgiAPeter WeissmanCytec Surface Specialties, Inc.(678) 255-4739 [email protected]: www.pdma.org/georgia

LoS AngELESEric Rose(818) [email protected]: www.pdma.org/losangeles

MinnESoTATom WormAspen Research Corporation(651) [email protected]: www.pdma.org/minnesota

nEw EngLAnD (BoSTon ArEA)Peter Flentov20/20 Innovation LLC(617) [email protected]: www.pdma.org/newengland

nEw York / nEw JErSEYJudy IskovitzOptimal Business Performance, LLC(973) [email protected]: www.pdma.org/nynj

nE oHio (CLEVELAnD ArEA)Dave LupyanScot Labs Division of the Scott Fetzer Corp.(440) [email protected]: www.pdma.org/cleveland

norTHErn CALiforniANoel AdamsPhase Forward LLC(415) [email protected] E-mail: [email protected]: www.norcalpdma.org

onTArioRichard SchepsWardrop Engineering Inc.(905) [email protected] E-mail: [email protected]: www.ontariopdma.ca

orEgonDorian Simpson NPDPPlanning Innovations Group(971) [email protected] E-mail: [email protected]: www.pdma.org/oregon

PEoriA (iLLinoiS) Roy BullivantCGN & Associates(309) [email protected] E-mail: [email protected]: www.pdma.org/peoria

PHiLADELPHiAJoshua CohenRatnerPrestia(610) 407-0700 [email protected]: www.pdma.org/philadelphia

roCkY MounTAinSJamie HenryFirst Data Corp.(303) [email protected]: www.rmpdma.org

SouTHErn CALiforniA (SAn DiEgo ArEA)Edward NaranjoGeneral Monitors(949) [email protected]: www.pdmasocal.org

TAMPA BAYMike PrestaNielsen Media Research(813) [email protected]: www.pdmatampabay.org

wEST MiCHigAnSteve RacelisUniform Color Company(616) [email protected]: www.pdma.org/wm

wESTErn nEw YorkStan CaplanUsability Associates(585) [email protected]: www.wnypdma.org

wiSConSinShajan JohnMilwaukee School of Engineering(414) [email protected]: www.pdma.org/wisconsin

PDMA AffiliatesPDMA AuSTrALiAAlex CrossleyEnergising Enterprises Pty Ltd61 413 42 [email protected]

PDMA e.V. (gErMAnY) Dr. Peter HarlandFischbachtal, Germany+49 (0) 6166 [email protected]

PDMA inDiAProf. Chandrasekaran KesavanR.M.K.Engineering [email protected]

PDMA nL (nETHErLAnDS) Dr. Gert Staal NPDPNew Business Development Academy B.V. +31 (0570) 670 [email protected]: www.pdma.nl

PDMA nEw zEALAnDAruna ShekarMassey University64-9-443 [email protected]

PDMA SE (SouTHErn EuroPE) Paolo ZanengaTWG Consulting sri+39 335 [email protected]

PDMA frAnCEEric Gabas-VariniArtemis International Solutions Corporation+33 (0)1 46 90 15 [email protected]

PDMA SuB-SAHArAn AfriCAColin OpenshawEnergy Services+031 [email protected]

PDMA uk / irELAnDMark Whelan NPDPEnterprise Ireland+353 61 [email protected]: www.pdma.org.uk

MoVing? noTifY THE PDMA offiCE 800-232-5241List compiled May 9, 2007: See the PDMA Web site for subsequent changes and more current information (www.pdma.org).

PDMA Chapters and Affiliates

Presort StandardU.S. Postage

PAIDPermit #118

Spencer, IN 47460

PDMA Headquarters15000 Commerce Parkway, Suite CMount Laurel, NJ 08054Phone: (800) 232-5241Phone: (856) 439-9052Fax: (856) 439-0525 Website: www.pdma.orgEmail: [email protected]

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2007 PDMA Visions June

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