Lean NPDI on the edge of excellence – a survey by PA Consulting Group

With technical complexity increasing and product lifecycles shortening, an efficient and cost-effective New Product Development and Introduction (NPDI) process is critical. The application of Lean to this important business process has been tried by many organisations in different ways - but is frequently misunderstood. Traditional Lean as practiced in Operations is not appropriate. However, the Lean philosophy can still be applied beneficially in a broad range of ways, by recognising that NPDI is a complex system, not a simple process.

PA has identified lean elements that, when practiced effectively and comprehensively, can break those negative cycles that cause a spiraling decline in business performance. Having investigated NPDI maturity through assessing firms against these lean elements, PA has found:

• A correlation between increasing maturity and likelihood of launching new products on time - Lean NPDI maturity is an indicator of success.

• Despite high levels of competence in the capabilities required for well performing NPDI systems, the average proportion of new product launches on-time and to budget is only 70-75% - having a serious impact on the ability to maximise lifetime product profits.

• Of most concern are capabilities with low levels of maturity - “Resource assignment”, “Capability development” and “Managing the value stream”. With resources being assigned ineffectively across programmes, and without the necessary capability development to reduce the scarcity of skill, companies struggle to break out of the spiral of poor performance caused by over utilised resources.

Product developers need to adopt a new strategy to improve performance. To drive improvement, businesses need to progress from a historic focus on essential “hard” factors such as product, process and infrastructure and start to build their “soft” capabilities related to people and how behaviour influences NPDI system performance.

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