Innovation & Technology

A company is experiencing problem with their latest product, it breaks too easy. The company decides that they need to improve their simulation activities to be able to better predict the the strength and fatigue life of their products. The R&D manager appoints an engineer in the organisation to lead a project to find and buy in a software tool that can solve the problem. During the project a specification is written and used to evaluate different software options. After careful consideration one software is chosen and acquired. The project  is finalised with a training for those who will be using the program.
One year later the next generation of the product is released on the market. Soon afterwards reports are starting to flow in with customers having similar problems as with the previous version.

So what went wrong?

• Is the new software not competent enough?
• Are the engineers not able to use it correctly? … But they are skilled and dedicated so perhaps the software is too cumbersome to use efficiently?
• The product is too complicated to be simulated?

It is usually along these lines people will explain why they are failing with software implementation.

But I will actually claim that the project was successful (a software was bought and installed). What failed was setting an appropriate goal for the project!

A R&D organization cannot be satisfied when they have installed the software and trained a few people, then they have gained nothing for their company. That would be like a Mount Everest expedition only planning and preparing for the first half of the mountain and expecting the climb from Camp II to the top on 8848 meters to happen on its own. R&D organizations cannot rest until they have changed their development process, all people involved have accepted and are working according to the changed process. The goal for the project should be something like to only have 0.1% products with quality issues or increase customer satisfaction with 30%. That type of goal brings value to the company.

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I happened to stumble over a quote the other day. Unfortunately I have not found the English translation so I give you my own translation from Swedish.

“Those who wait for the right moment lose time.” (Girodano Bruno, Italian philosopher)

It is often so easy to think that we need to have this and that in place before we start this change initiative so therefore we do nothing right now. Seldom do you hear of anyone who have really assessed the consequences of waiting.

One way of changing the mindset is to use options theory. The theory was first developed to value financial options. But later also utilised in “real-life” for business strategy and product development projects. Real options has two aspects, the mathematics to calculate the value of the option and the abstract thinking of business decisions as a string of options or opportunities. The real option itself is the right, but not the obligation, to undertake some business or project action. This implies that management is active and adjust the direction as more information become available. This method enables decision-makers to leverage uncertainty and limit downside risk. There are a lot of literature available on real options, for example here.

For my MBA thesis I wrote about real options in the area of software development with a lot of uncertainty but I have recently come to think that it can also be used for change management. Usually change projects tend to look huge and difficult and risky before they are started … and I do not go against that. However, if we break down the project in smaller parts where each part gives information about the possible options available. These options could be to continue the project in the current direction or to take a different direction that management believes to be a more profitable path or possibly terminate the project. Terminating the project then is not a failure. It is good business sense to try something and then get out before too much money is spent on it. But then you know that this does not work for your business or in your company.

What should be avoided is waiting for the perfect conditions or all the answers to all uncertainties. That could take forever and then the change project will definitely not realise and value. Act and try to create different options for your company to change in a positive direction.

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I have last week been running into the concept world leading. A quite common expression in a company’s mission statement is that they want to be world leading in their field of business. A few examples:

Walt Disney Company:
The Walt Disney Company’s objective is to be one of the world’s leading producers and providers of entertainment and information, using its portfolio of brands to differentiate its content, services and consumer products.

Bombardier:
Our mission is to be the world’s leading manufacturer of planes and trains.

And we should of course all strive to become world leaders in our field even though we cannot all reach that position. But while aiming for that position we must remember that what is world leading today is most likely not world leading tomorrow. Lets look at what world leading has been in certain fields at certain times.

Mobile phones: Mobira Talkman vs Iphone 4S

Cars: Ford Model T vs Nissan Leaf (the first electric car to be named Car of the Year)

This is what is so fascinating about innovation and development, there always seems to be a better way to do things. So when you put together your strategy to reach that world leading position remember to first figure out what is needed to be world leading in the future. Only then have you a chance of getting there.

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Last week I attended a conference here in Gothenburg on high performance computing (HPC). There were several very interesting presentations on different types of simulation. However, one presentation stood out as it did not go into the technical details of simulation and instead talked about evaluating investments in HPC based on business value. Since I am also promoting the idea about business value when talking to development managers it is nice to hear that there are companies who are following that direction.

I meet many companies about to invest in simulation software. Often their position is that they have come to the conclusion that they should do a certain type of simulation and they have started a project to buy a software. The end result of the project is usually to have the software installed and maybe had a training. What happens after such a project is likely that people get sucked into everyday problems and only spend a small amount of time on the new technology. In the end the software is hardly used and the new technology is not adding to the organization. This type of failure is usually blamed on the software.

What people tend to forget is that implementing a software tool is not a goal in itself.

What every development organization about to invest in simulation software should ask themselves is what the goal is for their organization. Is it to improve quality of products to increase sales? Or is it shorten development lead-time to lower cost of development? To reach these goals the organization has to continue the project to also include a new improved development process where the simulation activities are implemented. Not until the organization is working according to the new development process and have reached the business goal can they claim to have completed the project successfully. And only then is it a project that have added value to the company.

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Historically a prototype has always been a physical representation of the product, in whole or divided in sub-systems. To create it you need to have a detailed design, in many cases you need to have some sort of production tools made. Hence, physical prototypes are created rather late in the development project and they are very expensive to produce. The problem arises when the prototype does not live up to expectations and the product has to be redesigned. I think you all know how painful it can be to go through late design changes.

Therefore most companies have introduced virtual prototypes, computer models.  The simplest form of virtual prototype is a geometric representation of the product, a CAD-model. But technology today offers so much more and virtual prototypes can be used to simulate almost any of the products functions (like mechanical and electrical behaviour for example). So now companies are using those virtual prototypes but surprisingly enough it does not always mean that the number of physical prototypes are decreased. There is a resistance in many organisations against relying on the results from simulations and virtual prototypes. There are a few steps that needs to be taken to overcome this problem.

First of all we who are working with the virtual prototypes need to market ourselves and our results in the rest of the development organisations. We have to make it understandable for those who are affected by the results but not familiar with the technology in all its aspects.

Secondly, development managers have to figure out what would motivate disbelievers in the organisation. For example, if your organisation are developing cars there are engineers who think that driving is the best part of their job. If you tell them that they will not get that many physical prototypes they will obviously protest and object to any virtual prototypes. So what can we do to motivate them in the work with virtual prototypes? Today there are driving simulators available. With these you can connect a virtual prototype to a physical driving environment … much like a very advanced computer game. With this type of technology you can give your people something that can motivate them while removing something else. Go through your groups one by one and make a plan for how to motivate them to work with virtual prototypes.

Virtual prototypes can help companies shorten their development lead time and lower development cost. But to be successful they have to guide and motivate their employees in how to use this technique.

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After spending yesterday on the phone trying to reach people I have come to the conclusion that it can be a rather ineffective tool for communication these days. A friend suggested the use of pigeons and even though that for sure would create some attention it does not feel up to date. So here it is … our blog.

Speaking of communication, when it comes to innovation there is no quick fix. To be truly innovative in an organization people need to exchange ideas and contribute with their special skills and experience. The era of the lonely inventor is long gone and the time of global development teams is here. It puts completely new demands on communication and on companies to make sure they provide the necessary communication tools for development teams to be innovative. How far can we reach with phone conferences, skype, email and twitter compared to old fashioned face-to-face meetings? I am not saying that we should not use all modern tools available to us, they sure are useful. But we should also very consciously create areas where people can come together to be creative and innovative.

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