Conclusion: The Three Rules for Successful Distributed InnovationLarge-scale product development comes with risks that cannot be eliminated. The risks are even higher when different parts of the endeavor are distributed among different companies. However, there are three things that companies can do to take advantage of opportunities when they arise, and to avoid pitfalls. Rule #1: Analyze your DPD ecosystem Product development is often seen — wrongly — as being a monolithic function. In fact, it comprises hundreds, even thousands, of interrelated and parallel activi-ties. Product development managers need to have a clear sense of which activities create and sustain shareholder value, and which do not. Activities deemed to be noncore can often be safely out-sourced. The trick is distinguishing between these and the core activities; the latter should be the orga-nization’s focus. And if a decision is made to hand the work off, there should be specific recommenda-tions about how the handoffs will work across internal and external organizational boundaries.Rule #2: Have a plan for spanning boundaries The academic and popular press have at times banged the drum of modularity — the notion that it is possible to achieve a clean decomposition of work into parallel development efforts that can be seam-lessly merged later on.15Modularity does in fact have its applications. It usually makes more sense for a company to buy standard screws as opposed to mak-ing its own. However, most DPD efforts have too many interdependencies across the various subas-semblies to rely purely on a modular approach.Instead of attempting to assemble some ideal-VALUE CHAIN INTEGRATOR SKILLSWhat do you want to look for in an integrator? A lot. Specifically:A. Decision making: Estimating cost, timing and performance trade-offs for the design.1. Systems engineering: Establishing product architecture, making technical trade-offs across subsystems, and (where applicable) “decomposing” the product into modular subunits and specifying module interfaces.2. Business case evaluation: Understanding the product attributes that customers value and will pay for, estimating end-to-end product costs, balancing the various business objectives such as investment levels, features, schedule and margins.B. Project execution: Delivering a product that fits within the technical and business budgets specified during the decision-making process while maintaining its integrity from concept to customer.1. “Hard” project management: Setting objectives and milestones, identifying risks and establishing appropriate mitigation or contingency plans, effectively monitoring project progress and resolving project execution issues. 2. “Soft” project management: Effective motivation, persuasion, negotiation, mediation, translation and resource utilization and development.
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Management, new product development, MIT Sloan School of Management, Massachusetts Institute of Technology, Sloan Management Review
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