Innovators, Are You Applying the Wrong Lessons from Manufacturing?

Product developers can learn much from manufacturing, but many have gone too far in applying ideas that work in manufacturing to their realm. That's because they have ignored some fundamental differences between the two disciplines. Let's look at three and their implications.

Manufacturing produces physical objects; product developers produce information.This may seem like a trivial difference until you realize its implications. Physical objects are visible — in manufacturing you can see inventory and see precisely how it flows. In contrast, information is invisible — you can't see it or how it moves. When blockages impede flows in manufacturing you see piles of stuff on the factory floor. Blockages in product development result in invisible queues that can silently lead to massive delays. So, while manufacturers can easily assess flows by walking the factory floor, product developers need other ways such as "visual control boards," to make the flow of information visible.

This difference also creates opportunities because information can be handled in a very different way than physical objects. A physical object can be in one place at a time; information can be in many places at once. When product development processes are optimized, they look very different than the sequential, linear value streams that are common in manufacturing. For example, leading-edge developers never define all requirements before they begin design work.

Manufacturing produces things; product developers produce the recipes for making things.Manufacturing can produce the same thing a million times in a row and add value every time. If product development produces the same design twice, it has wasted money. Product developers must change the recipe to add value, and when we change the recipe, we introduce uncertainty. Eliminating all variability in manufacturing creates impressive profits. Do the same thing in product development and you will eliminate all innovation. This is alarming news for those are trying to transplant manufacturing's passion for variability reduction into product development.

Operating in the world of uncertainty requires different thinking and different skills. One of the most striking differences lies in how the two domains respond to increases in their workloads. Manufacturing, which has low variability, experiences small delays with increased loading. Product development, with high and necessary variability, sees big increases. It is extremely dangerous to operate product development processes at heavy loading because this generates expensive delays. The busier people become, the larger the delays. Increasing utilization to speed up product development is equivalent to trying to eliminate a traffic jam by putting more cars on the road. Why isn't this managed well today? In most companies the traffic jams are invisible, because they consist of information, not physical objects.

Manufacturing deals with stationary targets; product developers deal with moving targets.When we start a work order on the factory floor, we know precisely where our target is, and it stays there. In manufacturing our measure of execution is how close we come to our original goal. In product development it is whether we can repeatedly realign our effort with a moving target. The best product developers recognize that they are beginning work with imperfect and unstable information. Markets and technologies change; obstacles and opportunities emerge. These changes invalidate many of our original choices. The measure of execution in product development is our ability to constantly align our plans to whatever is, at the moment, the best economic choice. The best product developers are like a soccer team, they have a plan, but they constantly adjust to the flow of the game. Some ideas from manufacturing (for example, the notion that smaller batches allow you to improve cycle times, quality, and efficiency) work superbly in product development. But this can lead people to ignore the fundamental differences between the two. Failure to respect these critical differences can undermine the planning, execution, and evaluation of product-development projects. So learn from manufacturing, but be careful what you learn.

 

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