The project triangle posits that for any project, you can’t simultaneously specify the cost, the timeline, and features/functionality/quality. New product development, of course, is just another kind of project and therefore subject to the same constraints. So, when specifying your new product development project, which of the three are most important?
Classic new product development starts with features, functionality, and quality. Customer needs are surveyed and researched, requirements are written, prototypes are designed and analyzed…and the entire effort is either time-boxed or budget-boxed, depending on the industry. Good companies know whether time or cost is more important, but those are generally secondary to actual functionality or final product qualities.
I’d like to propose that for emerging and innovation-driven markets–like high tech–features and functionality represent the least important corner of the triangle. I think that some of the most innovative companies start by specifying the cost and timeline for new product development, and take a more hands-off approach to actual functionality. Companies like Google and 3M, which explicitly require employees to devote time to personal projects (PDF) already do this. Events like Hackday are even more explicit.
The different product development focus looks a lot like Agile software development methodologies. Instead of asking, “What should our new product be?” it asks, “What cool things can we do cheaply?” I think this makes the most sense in innovation-focused markets because these are places where we know the least about what customers really want. The less you know about what customers really want, the less value you can expect to get from a product specification process. Agile methodologies, similarly, teach us that it’s unlikely you’ll get anything right on the first try, so you’d better make each iteration quick and cheap (Google cache) so that you can get it in front of a customer as quickly as possible.
Even though this kind of product development may make sense for technology companies, it will be seen as a challenge to the traditional product management role. Their job no longer consists of telling people what to do. Since essentially they’re being handed stuff (Engineer: “I noticed that with only a few more lines of code, our Wiki software would make a pretty good MS Project killer!”) they become advocates, influencers, cajolers, and evangelists. It becomes a zen role: each new product becomes a surprise, an opportunity you cannot own, and a leap of faith to let others do what you had believed was your job.
The reward is profitability. The high-margin reward of being “first mover” can be overwhelmed by the sunk costs of the product development process. Explicitly starting by minimizing costs and decreasing cycle time means your margin of success is lower.
