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Lean Development – new principles for innovation management and a more time and cost efficient development of novel products

Final Report Summary - LEAP (Lean Development – new principles for innovation management and a more time and cost efficient development of novel products)

This project has been concerned with the question of what enables those companies to attain efficiency in new product development (NPD), and thus competitive advantage, particularly by studying the concept of lean product development (LPD).
How to manage efficiency has been of consistently high interest for decades. It started all the way back with managers such as Frederick Taylor, Henry Ford, or Taiichi Ohno who developed principles that raised efficiency in manufacturing by factors. Later, in 1990, Womack, Jones and Roos published the famous book The Machine That Changed the World that provided explanations on why Toyota’s production processes were more efficient than those of other car manufacturers. Thereafter, numerous companies in all manufacturing industry sectors have heavily invested in lean production processes and have adapted Toyota’s production system to become more efficient and to stay competitive. In contrast to production environments, product development is characterized by higher levels of uncertainty and knowledge intensity as well as much longer cycle times. The application of such strictly rule-based principles to NPD is thus much more challenging. The objective of this research project was to understand how lean management approaches can be transferred, adapted and applied to NPD. By doing so, the following research questions have been addressed. Among them; Which principles, practices and tools are transferrable from lean production to lean product development? Which principles, practices and tools are unique to product development and cannot be found in lean production? Furthermore, this project shed light on the transferability of lean development approaches across geographical and cultural boundaries, in particular from Japan to Europe.
We built a profound know-how basis of lean development. We studied the existing literature on lean development. We connected to a number of lean practitioners and the majority of lean development researchers and thereby build an global network of lean researchers and experts. Every year we visited firms and academics in Japan, where lean development has its roots. For two years, we collaborated intensively with a Japanese researcher, who helped us to interpret and understand the Japanese way of NPD and how they apply lean development practices We transferred the considerable knowledge that we gained through these numerous activities and exchanges to our four partner firms. We organized workshops, company visits and so on to discuss the different lean practices and tools and ways to apply them in a NPD setting.
At the same time, we studied intensively the traditional NPD processes of our partner firms, in order to understand their specific NPD context and how lean development may be deployed in their context. In the course of the project, LEAP firms selected different lean development principles and methods and implemented them. We observed the process of implementation and exchanged the respective firm’s experiences.
As a result of the theoretically and empirically gathered material, we have developed a framework that helps us capture and compile single elements and the underlying logic of lean development. It’s major components have its roots in the five lean thinking principles, namely 1) identify customer value, 2) map the value stream, 3) create flow, 4) establish pull, and 5) strive for perfection. In addition to that the ideas of Toyota Kata leadership, the definition of a true north as vision and continuous plan-do-check-act cycles ensure a step-wise progress from a current condition to a desirable target process condition. Moreover, the framework refers to a number of lean management methods, such as Obeya, visual planning, or set-based concurrent engineering. Thereby, it does not claim to be comprehensive with respect to methods. Instead, it is open to create new methods as means to realize the five above mentioned principles and the leadership approach of Kata.
Key insights (main results) on:
Transferability from production to product development: Characteristics of production and product development are inherently different. Examples are the repetitiveness of the processes, the necessity of process iterations, the role of creativity, or the time needed for one process to be completed. The five lean principles are transferable and apply to NPD too. What changes, however, are the practices and tools through which they are operationalized. Nevertheless, there are some tools such as visual planning or lean daily management that can be transferred with only little adaptations from production to new product development. Others, such as SMED, single minute exchange of die, do not necessarily apply to product development. And again other methods such as set-based engineering or the obeya are unique to lean development.
Transferability from Japan: Lean thinking originates in Toyota.. As Toyota is a Japanese company, the question arises whether the Japanese culture and context is a precondition for lean development. The results of this project show, that lean development is similarly deployable and similarly effective in a European context. However, European firms have experienced more application difficulties where effects are not visible immediately but appear after a longer period of time. Before launching new lean programs in their NPD, they started with pilot projects to deploy selected lean methods. Further, although lean thinking has its roots in Toyota, it has been taken up and advanced by Japanese and non-Japanese academics and firms other than Toyota. Examples are Kata leadership by Mike Rother or economic approaches to decision making and process design in NPD to create flow by Don Reinertsen. The latter clearly resembles lean thinking with the objective of creating flow in NPD. The reasoning, however, cannot be found in case descriptions of Toyota or its supplier companies.
In the course of the project, LEAP (partner) firms deployed selected methods, with varying effectiveness according to their needs and adapted to their organization Below we list the main tools that were the most effective ones:
To determine a True North (i.e. a measureable objective for NPD efficiency improvement) was challenging for most firms. This indicates that in European firms, efficiency improvement is often performed either without specified improvement objectives or with a greater number of measureable objectives. Where the idea of one leading objective was successfully implemented, it showed significant efficiency improvement effects.
Visual planning (i.e. to manage projects with the help of a physical project board with weekly project meetings) showed great effects for adherence to project objectives such as timeliness due to systematic and timely transparency on task assignments, resource capacity, or problems.
Obeyas (i.e. project rooms with the current project status visualized on the walls) have proved to be effective where NPD teams are collocated. In cases where teams are dispersed at different locations across the Europe or even the globe, the concept needs to be developed towards virtual, electronic based Obeyas.
Value stream mapping (i.e. mapping current and desired NPD process including iterations or capacity constraints etc.) was considered effective with respect to a better understanding of the integrated process. Implementation experiments in the project revealed that expert knowledge is needed to conduct value stream mapping effectively in order to benefit from it and to capture its value.
Set-based concurrent engineering (i.e. to develop several design solutions for one new product) was deployed in two firms and was considered resource intense but effective for finding the best solution. In particular, this method offers a very specific means for the general principle of frontloading development projects for their efficiency.
Critical antecedents (success factors): Our research has revealed a number of factors that determine the adoption success of lean management in NPD. First and foremost, top management must truly believe in the potential of lean for increasing the effectiveness and efficiency of their product development activities. Because of the characteristics of NPD, it is difficult to achieve considerable short-term success with lean. Lean development activities will mainly pay off in the long-run. Second, the selection of the right tools to start with is decisive. Ad hoc problems solving tools, such as 5-Why or value stream mapping, are particularly suited to achieve initial success. Nevertheless, in the beginning these tools need to be applied by an experienced moderator. This ensure that they are applied as intended and deliver the expected results. And third, given that the transfer of lean practices and tools from production to NPD is challenging, it is highly recommended to work with an external facilitator that is experienced in LPD. This helps to increase the credibility of the concept among engineers that are often hesitant with regard to standardized and standardization tools.
We disseminate our insights through academic- and practitioner-oriented articles, presentations at academic and practitioner-oriented conferences and through bilateral discussions with academics and with industry representatives who are interested in lean development.
In conclusion, the project contributed to enhance our understanding of lean development, as a way of thinking that is accompanied by a non-comprehensive number of methods. Originating in Toyota, and as opposed to the Japanese culture overall, it has experienced further development by academics inside and outside Japan and by other companies. Lean development can be effectively deployed in European firms with significant effects on NPD efficiency. Important antecedents are top management commitment and engagement, long term thinking, and the willingness to experiment with unconventional practices.