77% of Product Development Effort is Wasted

Product Management, Engineering

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It’s an open secret: Companies fritter away a staggering amount of time, money and resources during the product development process. Josef Oehmen and Eric Rebentisch of MIT’s Lean Advancement Institute, for instance, put this number at 77 percent. In any amount, waste is a drag on profitability and hinders a company’s ability to deliver value. Left unchecked, it can make your company to go bust.

So, what’s a company to do?

Step 1: Identify the waste.

Oehman and Rebentisch break the various kinds of product development activities into a few instructive categories.

  • Value-creating activities. Example: visiting a customer to gather feature requests.

  • Necessary, but non-value-creating activities. Example: handing-off a product from one team to another.

  • Wasteful activities. Example: over-engineering a feature or building one that’s never used.

Beyond this, the pair offer some startling insights using the concept of idle tasks:

[C]ore project activities are often idle, as engineers are waiting for necessary input. Based on LAI’s research and experience, the central value-creating engineering tasks are idle for most of the time (62%). If the tasks are active, engineers spend 40% of their time on pure waste, 29% necessary but non value adding activities, and only 31% on value adding activities.

Waste in product developmentPerhaps you’ve seen this waste-generating cycle play out before. Engineering is heads down on a product roadmap item, but they get sidetracked on a key fix for a large customer. Or maybe a big feature is lagging in adoption and the decision on whether to axe has dragged on for two quarters. Or perhaps your Sales, Marketing, Product and Engineering teams are struggling to produce a coherent and viable product roadmap that achieves broad buy-in from the broader organization. There are as many ways to produce waste as there are to produce value — and therein lies the danger.

Step 2: Focus on value.

Oehmen and Rebentisch summarize the 5 Lean Principles as follows:

1. Define value to the program stakeholders

2. Plan the value-adding stream of work activities from raw materials until the product delivery while eliminating waste

3. Organize the value stream as an uninterrupted flow of work pulsed by the rhythm of time, and proceeding without rework or backflow

4. Organize the pull of the work-in-progress as needed and when needed by all receiving workstations

5. Pursue perfection, i.e. the process of never ending improvement

Not bad, right? But how do you effectively integrate these principles with your product development process in a transparent, scalable manner? (Hint: see Step 3.)

Step 3: Use smart data.

On its own, data is messy and meaningless. Across your operations and among your teams, you likely have data that answers some of your biggest product and market challenges. You likely also have data that uncovers entirely new challenges you’ve yet to identify. The problem isn’t the lack of data — the problem is that there’s no structured way to make sense of what’s out there.

Wizeline’s approach to “using smart data” is to provide a transparent, central repository for all your company’s pertinent data. This goes for both quantitative inputs, such as costs or market data, as wells as for qualitative inputs — such as which product features drive the most value for your customers. Only when you combine both qu in a structured, transparent way are you able to:

(1) Truly close the loop between outcome (i.e., what happens in the market post-release) and what we call the opportunity stage (i.e., what happens during product planning and roadmap definition).

(2) Hold teams and individuals accountable to product performance.

(3) Track ROI and performance of your product lines over time. 

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Peter Moore Posted by Peter Moore on Monday, March 31, 2014.

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Dec 12, 2017

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