PDMA Blog

This past September, the folks at the RTP Product Development Guild hosted their annual Product Design Street Fair. It had the flavor of a trade show as it brought professionals together in an interactive environment, but by it’s design it was a little different. It offered the same unique advantage any typical street fair or block party would have, giving companies in the area an opportunity to interact on the local level. Newcomers got the chance to meet companies that were right down the street. The folks who returned from previous street fairs, found a chance to stay current with the local product development community and get acquainted with new contacts.

The intent of the street fair is to bring them together in an interactive environment (Download Event Guide / Program or Watch Video). This benefits the design and development community by strengthening communication in a fun and easily accessible way.

Bill Seil
Industrial Designer
info@seil.us

BarCampRDU 2008 was a lot of fun. According to the official website (http://www.barcamp.org/BarCampRDU):

A Bar Camp is an unconference where people interested in a wide range of technologies come together to teach and learn. Unfamiliar with the un-conference format? Here’s the idea in a nutshell. Rather than having scheduled speakers, everyone pitches sessions the morning of the BarCamp. Those sessions are put on a schedule, and lots of little groups form for intense group learning. Everyone is expected to teach, to talk, to participate. Yeah, its different from a regular conference - but it works!

The idea of an unconference came together when people realized the best times they were having at conferences were the times between sessions - where people with like interests could meet ad hoc. The goal of BarCamp is to facilitate this type of interaction for an entire day. We supply the food, the space, the wireless, the projectors - you show up to teach and learn.

Much of the discussion at the event involved startups and early-stage projects.

It is important to note that many (if not most) of the attendees at BarCamp are involved in the software, either online or shrink-wrapped. Our firm normally deals with physical projects that involve long lead times and very high prototyping costs. At BarCampRDU many of the projects, or concepts being discussed, revolved around software products that could be prototyped in a weekend. This is a stark contrast to the extremely high prototyping costs that we see associated with many mass-produced physical products.

There was definitely an excitement to the conference that showed through in the interactions between the attendees. This is the type of event that provides encouragement, advice and resources for budding entrepreneurs. It is my opinion that we need more of this type of event to help fuel imaginations and sheer force-of-will behind the next wave of product-driven companies.

Montie Roland is President Emeritus of the Carolinas Chapter of the Product Development Management Association. Roland is also President of Montie Design, a product development and prototyping firm in Morrisville, NC and the RTP Product Development Guild. You can reach Montie by email at: montie@montie.com

We are working hard to make your PDMA membership more valuable.   We have purused more tangible benefits such as a free subscription to Fast Company, discounts on Business Week subscriptions and Hertz car rentals.  We are getting ready to launch a group health insurance plan which is a big deal.  And we’re not finished either.  We are assembling a task force to look at how to create even more membership value.

So the question to you is “will you be renewing next year?”.  If the answer is “No” then we would like to know why.  What were  you expecting from PDMA that we did not deliver?  Are you not growing in your knowledge anymore?  Are you transitioning into a new role?  Be brutally honest (hey, I used to work at Intel where its called ”constructive confrontation!).

If the answer is “Yes but…” then we also want to hear from you.  While we appreciate your loyalty we want to earn it.  I’m also guessing for some reason your not recommending PDMA to others who are considering membership.  What’s holding you back?

In the words of Frazier Crane “We still have a few minutes left, and all our lines are open”.  I hope to hear from you.

- Donovan

It’s great that the new Apple iPhone has 3G, GPS and a $199 price tag.  Yet to me that’s not nearly as interesting as what has changed with Apple’s business model.  It was less than a year ago when the iPhone was $599 and was being positioned by Apple as an exclusive, high-end smartphone.  Clearly, times have changed.

The smartphone market is a very different game than the personal computer industry where Apple has been able to control its own destiny through a vertically integrated business model.  It’s not so simple in the smartphone business.  Service providers are very competitive.  A myriad of different wireless standards across various spectrums and competitors like Nokia and Research in Motion that can crank out new designs so fast that it makes the PC industry seem glacial.

These realities have obviously affected how Apple is now approaching the launch of the new iPhone.  Technology is important and that’s why 3G now makes the iPhone competitive (2.8 times faster the original iPhone) with other smartphones.  But the business model is what’s really different.  Apple execs must have realized that size actually does matter, and in order to be successful the iPhone needs to be more than a high-end, iconic product.  Selling 10 million units will not cut it when Nokia can easily sell that many in a month.  To increase volume, Apple had to offer the iPhone at a lower price point. It also had to make the iPhone available to many other service providers.  Apple plans to make it available in 70 countries.  Lastly, Apple changed the deal with AT&T, which enjoyed a year of exclusivity on the iPhone.  AT&T will subsidize iPhones just like it does with all the other cell phones. 

So what are the implications from a product innovation standpoint?  Clearly the iPhone is now competitive technology-wise, but Apple may have to sacrifice its “iconic” image for sales volume.  It still maintains feature advantages because of its user-friendliness and integration with iTunes.  Yet product development just got a lot harder.  New suppliers, service providers, wireless technologies and markets will pose significant challenges for Apple.  The company has less control of the ecosystem than it has with Macs and iPods.

With all that said, I have to admire Apple’s gumption.  It is serious about winning and has adapted its products and business model to the market realities.  Many companies have chosen the easier path of ignoring market realities until it was too late.  Given their Midas touch in other industries I wouldn’t be betting against them.  “Think Different” has become Apple’s way of doing business, and they are getting better at it.

Agree or disagree?  What do you think Apple should be doing differently?

I remember a few years ago when Apple announced that they would transition from the IBM PowerPC to Intel Core 2 processors.  This was a major strategic shift for Apple and based on the quarterly earnings reports since the decision it has proven to be brilliant.   However, during  the same week that Apple announced great fiscal second quarter 2008 earnings (51% increase in Mac sales year to year in the last quarter)  they also announced that they were acquiring PA Semi.  PA Semi was founded by Dan Dobberpuhl, the lead designer of the DEC Alpha series of processors.  P.A. Semi is a privately held company that designs power-efficient processors.

I wonder what this $278 million investment means for Intel.  Was Intel caught off guard by Apple’s decision?   Does this threaten Intel’s chances to win an iPhone design with their new Centrino Atom processor?  Does this mean Apple is going to create it’s own microprocessors for Mac and iPhone?   

This Apple-Intel relationship makes them one of the the Silicon Valley’s oddest couple.  Intel, innovator of the x86 family of microprocessors, helped horizontalize the PC industry by embracing open architecture, open standards, and teamed up with Microsoft to create the 800 pound gorilla called Wintel.  Meanwhile Apple, creator of the Apple II, Macintosh, iPod, and iPhone has always remained closed architecture, proprietary standards, and listened to the beat of a different drum.  But markets and business conditions have changed.  Both realized the need for each other.  Apple Macs were ingeniously designed but were performance challenged because of IBM’s lack of investment in the PowerPC.  IBM was in the midst of changing to a services business model.  Apple needed a supplier who had a compelling technology road map.    Intel needed Apple because they needed new growth outside of the Wintel box.  Apple gained a capable supplier and Intel was now associated with an iconic brand.  This relationship has been a win-win for both.  So why does Apple want to undermine this relationship?

I, like many others, can only guess why Apple bought PA Semi but I doubt it’s because they want to push Intel away.  PA Semi doesn’t currently make a competitive product to what Intel currently offers.  Apple needs Intel’s technology and manufacturing excellence if they want to produce leading edge products in high volume.  It would be very costly to design and develop their own proprietary chips and would move them away from their core competencies in product design and ease of use.  More importantly, it would alienate a great supplier relationship with Intel.  My guess is that PA Semi was acquired to create some unique intellectual property for Apple that can be used to differentiate their products, not replace existing supplier.  I might speculate further that the IP created by PA Semi will work with the new Intel Atom microprocessor in such a way that it will be very difficult for an Apple competitor to copycat.  Whatever the real strategic intent, Apple is thinking of something brilliant and the acquisition of PA Semi is only one of many tactical moves in a larger strategic plan.  I can hardly wait to see what unfolds.

Do you disagree with me?  Why do you think Apple bought PA Semi?  Do you think Intel has a shot at winning an iPhone design? 

Now that I’ve been studying user-centered innovation for some time, I began to wonder where the first insight into this phenomenon came from. So I did some research and found a very detailed interview with Eric von Hippel in which he describes the genesis of his Lead User theory. I’m copying and pasting the portion I found most relevant but the whole interview is probably just as insightful:

Well, when I first came to MIT, ideas about how new products and services should be developed were based upon a manufacturer-centered innovation model. This model, in essence, instructs manufacturers to “find a need and fill it.” The basic idea is that it is the manufacturer’s job to accurately understand your needs, and then make the perfect product for you. In fact, this is still the standard model of the innovation process taught in business schools today, which is one reason that understanding of user-centered innovation is still at such an early stage.

Before I went for my Ph.D., I was an inventor and participated in a startup - and tried to rely on the manufacturer-centered innovation model as I had been taught to do. Full of confidence, I went off to talk to suppliers saying, “Well, here’s a need I have for a new product you do not currently make.” The uniform supplier answer was, “No, you don’t. You need what we sell.” It was just so funny.

For example, once I needed a fan that was higher-performance and smaller than anything out there. And so, I asked this company to develop it and sell it to me. I said, “I need it.” And they said, “No, you want our standard one,” and I said, “No, I don’t.” And then they said, “Well, it is impossible to build what you want - it’s against the laws of nature - so you have to take what we have.” So, I went to Princeton with my problem and I got an aerodynamic specialist there to design me the fan. I then took it to the manufacturer who said, “Well okay, we’ll make it, but you have to buy the tooling. And you have to pay for them 10,000 at a time, and so on and so forth.” So, we did all that. The fan was wonderful; it did exactly what we needed in the fax machine we were designing. (The startup I worked for made fax machines.)

A few weeks later, the fan company reps called me up and said, “You know, it turns out a lot of other people want your fan too. Can we use your tooling to produce it for them?” I said, “Sure, talk to our manufacturing guy, and I am sure he will arrange something.” The arrangement was made, and shortly afterwards that company put out these ads saying, in essence, that “via our deep understanding of your needs, we knew you needed this new type of fan. And so, of course we developed it for you, our beloved customers.”

I found this so interesting. I thought to myself, clearly the manufacturer-centered innovation model did not work in this instance. But there is such a strong belief in that model that the fan supplier thinks it did.

Anyway, I brought that insight with me to MIT. I began my own research with the idea that, probably, it was really the users who were the innovators, and often not the manufacturers. That was way back in 1976, and things just built from there. I then realized that I had to join with other innovation researchers to build a big enough playground of data and concepts in the arena of user innovation to make it attractive for other people to be able to do their own work. That is, we had to generate enough findings related to user innovation, and create a robust outline of a theoretical framework, so that other people would be interested and would start to plug into it. All that took a long time, but eventually, we got here.

Starting about 2000, user innovation related to the Internet, blogs, and open-source software began to become very visible. As a result, many people began to think, “Oh gosh, maybe the manufacturer-centered innovation model isn’t the only way to go. Maybe innovation is really user-centered, and ‘user-developed content’ really does matter!”

At that point I and my academic colleagues were in a position to offer an academic framework to help people in their early efforts to make sense of a user-centered world. Anyway, that’s my view of how things have evolved. As my colleagues can also tell you, it has been a really long slog. Wonderful colleagues who have helped are many. Some who have been very important during the past several years are Professors Dietmar Harhoff, Nikolaus Franke, Joachim Henkel, Christian Luethje and Karim Lakhani. It’s much more fun to do this kind of early work with good friends. We can cheer each other up when our work gets dissed, as it regularly did in those days.

Thank you Tom Austin for doing this great biography. Here is a link to his complete article: http://www.gartner.com/research/fellows/asset_172822_1176.jsp

The annual Maker Faire is on for May 3-4, 2008. It’s a great place to see what creative people are doing in the yay area.

Maker Faire: http://www.makerfaire.com/

I went two years ago seeking to understand creativity: http://innov8or.blogspot.com/2006/04/art-or-invention.html

Today’s client generally wants a product that is economical to manufacture, elegant, and robust. Robust products have an advantage in the market place. This is especially true in this age of the easy accessibility to user reviews over the Internet.

According to the Wikipedia,

Robustness is the quality of being able to withstand stresses, pressures, or changes in procedure or circumstance. A system, organism or design may be said to be “robust” if it is capable of coping well with variations (sometimes unpredictable variations) in its operating environment with minimal damage, alteration or loss of functionality.

Why is robustness important? Robust products perform as expected in a wide variety of situations, environments and contexts. Robust products often outperform expectations and delight users. Robust products have significantly reduced warranty returns. These products leave a positive impression on the user. Customers often respond by becoming local, or internet, evangelists for the products. These customers may also become life long users and purchasers of the product, or service.

Developing criteria to gauge the robustness of a product can difficult. Some industries and user contexts (such as military) already have specifications in place to gauge the robustness of a product. Unfortunately, many industries do not think in terms of robust products. Robustness can be a broad and vague requirement, especially if the approach to defining qualitative (and subjective) terms is not organized and methodical.

A good way to understand robustness, is to look at areas that are impacted by the robustness of a product. One area that robustness impacts is manufacturing. A robust product tends to be easier to manufacture because it is less sensitive to tolerances and other small variations in the process. When a product is less sensitive to changes in the manufacturing process, it is usually less expensive to manufacture. Robustness at the manufacturing level is often the result of well planned and executed design that avoided “mission creep”.

Robustness at the user level is manifested in many ways. One example is having the product perform as expected on a continuing basis. An example of a robust design is the ignition switch in your car and the key to turn the switch. This switch is often used twice a day for ten or more years. The key that you started your car with today is probably in your pocket, or purse, as you are reading this article. That key is constantly (while carried in a pocket or purse) in contact with other metal objects such as change and other keys. Many times, at the end of the day, keys are tossed into a bowl or other container for overnight storage. Car keys see constant wear and abuse from the user and the environment. However, when you walk out to your car you, expect the key to turn the ignition and the car to start. The devices are used in a wide variety of environments from cold weather in the winter to hot weather in the summer. The user may be wearing thick winter gloves. Keys also must be adaptable for use in a wide variety of environments from a man’s trouser pocket to a woman’s purse. They must be small enough to fit in a purse or pocket. The car key and ignition switch are examples of two very robust devices that function very reliably for an extended period in wide variety or circumstances and environments.

Robustness must be designed into the product from the beginning. One way to develop robust products is to determine (in the beginning of the project) exactly what product it is that you really wanted to design. Products must be well defined and targeted. Mission creep (the addition of unnecessary or previously unanticipated features) is the enemy of robust products. Mission creep is where the product design mission is expanded from the initial, targeted product. Mission creep diverts resources and time away from the appropriate product in an effort to extend the product into areas, or features, that aren’t critical for the success of the product. This lack of focus can result in extra product features at a cost to the robustness of the product.

Robustness also comes from a commitment to integrity in all stages of the design and manufacturing process. Customers expect robust products. Companies delivering robust products exceed the expectations of the customer. They are also creating an environment that encourages repeat purchases from satisfied clients and that is good for the bottom line.

Montie Roland is President Emeritus of the Carolinas Chapter of the Product Development Management Association. Roland is also President of Montie Design, a product development and prototyping firm in Morrisville, NC and the RTP Product Development Guild. You can reach Montie by email at: montie@montie.com

I have always been a proponent of companies not cutting their budgets on innovation during market downturns.  Cost cutting can only go so far and companies who do it repeatedly without developing any new innovations in the pipeline are only dooming themselves to commoditization and eventual loss of market share.  One only needs to look at the Motorola Razr as a recent poster child for what can happen to you.

One has to take a strategic look at their products and services and be a little paranoid (for some of you maybe a lot).  Is there a disruptive technology looming on the horizon?  Do we have a competitive roadmap or are we just relying on more sales which will commoditize our brand?  Do our development cycles give us the agility to respond to fast changing markets and consumer preferences?  Do we really think our competitors are going to do nothing and just let us take market share away?

During my time at Intel one of the great things I admired about Intel’s senior management was that they were strategic, paranoid, and decisive in their actions.  Getting out the memory business and into microprocessors was a huge strategic inflection point (to use Andy Grove’s term).  Craig Barrett’s decision to invest billions in manufacturing after the Internet Bust in the early 2000’s allowed Intel to meet the increasing global demand that occurred after the recovery.  Of course Intel made some strategic mistakes along the way such as staying too long on the Pentium 4 architecture but it merely highlights the fact that you must always be innovating whether it’s good times or bad.  It also points out the willingness of a competitor to seize you by the throat if you don’t innovate.  So go ahead and tighten your belt during this economic downturn and practice operational excellence.  But don’t tighten up too much on innovation because that would be a noose around your neck not your waist.

I would like to hear if you’ve experienced the same thing in your industry or company.

In product development we are typically working to provide more value, to add more features and functions to simplify the user experience and provide additional product value. But in many cases the task is slightly more complicated when developing products for emerging markets. In these markets the value of a person’s time is not nearly as dear as is reducing the outlay of cash for things that low priced employees can do on their own.

There is not such a strong emphasis on the efficiency of people’s time, but instead the limiting factor is often the outlay of cash. Anything that can be done in emerging markets to reduce expenditures is often the first choice when the value of human capital is so much less expensive than what we are used to in the US. Take a look at these Matrix of Key Economic Factors in the Top 20 Economic Powers - such as the average GDP per capita (this is typically the closest approximation of average annual salary) and you’ll get an idea of how much it costs to get an employee to perform a task – or on the other side of the equation, how much disposable income an average consumer may have to spend, by country.

I’ve done a great deal of market research within the US as well and I can tell you that the same operating theory is at work in companies with employees of vastly different incomes in the US as well. In companies where the environment is full of lower paid employees, management is less likely to make significant cash outlays in order to save a few minutes of time for a lower paid employee. However, at the other end of the pay scale (with doctors, or attorneys for instance) management will make great expenditures to save just a few precious minutes of an employee who may be paid $150K to $250K a year. It’s only logical that the value of an employee’s time should be balanced against the cost to the company for a certain task to be automated v. done manually. A great example of this tendency is a new phone which is targeted at emerging markets.

The Herald Tribune recently reported on the People’s Phone, which is made by Spice Limited, out of Nodia, India. “Wireless, No Flips, no Folds – Just a Phone”. The “People’s Phone” selling for just under $20 is a very simple phone with only one function sending and receiving cell phone calls. Nokia and LG are also looking into Emerging Market phones with the most basic features. However, this doesn’t mean that an emerging market product is simply a stripped down version of an American or Western European product. In many cases international markets have unique needs or preferences that can be a showstopper just as quickly as an over-feature/over priced product.

That will be the topic of another blog soon. Here’s the whole Herald Tribune article if you’re interested: Herald Tribune: “No flips, no folds - just a phone”

Know Thy Customer,

Chris Hawkes

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