Quality Progress - May 2013 - (Page 42)
BY Peter Merrill
risk and Development
Managing risk during new product development
I wrote my first Innovation Impera-
In this month’s column, I am going to
Some of the primary areas in which we
tive column for QP in January 2012,1 and
move beyond identifying the nature of the
need data (which, by the way, likely will
my practice has always been to take the
risks we must address and look at how we
not be crisp) are as follows:
issue’s theme and address it from an in-
manage those risks.
1. The time needed to develop a working
solution. At this stage, we are only at
The January 2012 issue’s theme was
risk. I discussed how risk enters the in-
My first key point is one you have prob-
novation process. I explained how risk is
ably heard before—fail early. The innova-
internal and external, and how organiza-
tion process has two phases: creative and
tions have become extremely risk averse
execution. The budget for the creative
as we have increased our understanding of
phase is typically only 20% of the total
risk. However, there is evidence that the
cost of getting a new offering to market.
more radical or innovative our new offer-
Clearly, the more we can weed out the
ing, the more profitable the outcome. But,
weak offerings in the creative phase, the
the more radical the offering, the greater
better the outcome.
the risk attached to it. In short, innovation
is a risky business.
The creative phase has two steps:
1. Identifying the opportunity.
2. Connecting the conceptual solution.
Focusing on the second step, physicist Linus
2. The probability of being able to produce a working solution.
3. The cost to produce a working solution.
4. How radical is the new solution compared to current solution?
5. How easily can this solution be copied
by the competition?
6. Do we have in-house competencies to
produce the solution?
7. Who are the new suppliers we will
need, and what is the risk attached to
8. What are the delivery chain choices and
the attendant risk?
Pauling said the best way
9. What price will the market bear?
to get a good idea is to get
10. The likely return on investment (ROI)
lots of ideas. To gener-
of the new product or service.
ate lots of ideas—and
Those of you who live in the R&D
especially to generate
world will be familiar with the necessary
radical ideas—we must al-
data for developing a new product. Much
low these two steps in the
of this data will have wide tolerances at-
creative phase to operate
tached, but that does not excuse us from
in a loose or free mode.
collecting the data. It can often be helpful
At that stage, in fact, we
to provide support for data collection to
avoid even thinking about
the folks working on the proof of concept
if data collection is not their strength.
But after we have
Another issue to be aware of is the in-
generated our potential
solutions, we do need to
This can happen so easily and is difficult
address risk. To do that,
to detect. Somebody sees a wild idea and
we need data. Unfortu-
says to themselves: “Oh, I’ll kill that right
nately, creative folks do
away,” meaning, the person will use data
not always enjoy data
to reject the idea. And yet, that wild idea
collection, but it is vital to
may be the perfect solution to the op-
42 QP • www.qualityprogress.com
troduction of bias into the data collection.
portunity we are addressing. Us engineers
Table of Contents for the Digital Edition of Quality Progress - May 2013
Mr. Pareto Head
Avoiding an Avalanche
What Makes You Tick?
Quality in the First Person
Special Section: ASQ Enterprise and Site Members
3.4 per Million
One Good Idea
One Good Idea
Quality Progress - May 2013