An important aspect for driving success in new product development and by extension, long-term firm performance, is to maintain a balanced project portfolio (1). The second class of risk is complexity, which exists in a system where there are a large number of parts that interact in non-simple ways. The final risk category is unforeseeable uncertainty, which is typically referred to as “unknown-unknowns”.
The project manager, therefore, is faced with first understanding at least qualitatively just what kind of risk the project faces at any particular time in the project and then secondly, using the appropriate project management tools based on that.
Once there is an understanding of the type of project risk you may be facing, how will that impact the specific project management tools?
While the use of Gantt charts, “Critical Chain”, and risk lists work well for projects with normal variation and foreseeable uncertainty, dealing with complexity requires additional techniques. The diagram below is an excellent summary of the preceding discussion on risk and risk management techniques. Some recent research relates project risk to two other project management decisions: process concurrency and the level of team integration (6). In the preceding discussion on the nature of project risk, and the various project management techniques that can be used based on the risk, we focused on the technology. On the other hand, overlaid on the technological risk factors, a new product may be intended for a new market segment that is not well understood by the firm or to a market segment where the needs are constantly changing.
For projects where market ambiguity dominates, the authors concluded that a company should use a broad base of data and techniques for collecting data.
When market volatility dominates, it is better to reduce the amount of front-end participation and the amount of ideation, and have robust senior management involvement early.
Of course, you could envision an environment where you might face both market ambiguity and volatility.
In summary, every project has different risk factors associated with both the technology and the market. New Product Visions is a consulting company that helps organizations improve the effectiveness of their new product development processes.
This entry was posted in NPD Organization Structure, Overall NPD Process, Project Management by admin. DisclaimerWhile this blog is maintained by an employee of EMC Corporation it is not a corporate blog. I’ll continue to share more about this particular experience in transforming an organization to use Product Management for IT and talk about tactical steps for implementing this yourself in future blog posts.
There are many different models of PLM, as a result of the various interpretations of PLM elements and fundamental design, which tend to be specific to each provider. Another example of the PLM model, provided by the PLM Technology Guide, shows the core technology of a PLM system, (located on the bottom) and some of the many solutions that can rest on the basic technology.
In this diagram, provided by Machine Design, the enterprise "360 degree" PLM system is depicted as a central data repository, tying together departments in an enterprise to drive product development and allowing for collaboration over the network. The PLM Consulting firm Kalypso offers this diagram illustrating the components of a comprehensive PLM solution for the semiconductor industry. This Product Release Checklist is composed to help business managers in launching new products or services at the market, so it comprises a set of helpful ideas on how to make this process smooth and seamless.
Preparation for the air vacation is actually the beginning of the trip, because when you start planning, it gives you a thrill of anticipation. Every project has different risk factors, and the risk will likely change as a function of time from the start of the project to when the product is introduced to the market.
For purposes of this discussion, technology refers to the actual technology of the product itself or the manufacturing process technology, or both.
You can have a large system, but it is not necessarily complex unless all the parts interact. First, every project will have some level of unknown-unknowns, and those along with risk due to complexity, will make up residual risk described above. A typical Gantt chart works wonderfully once risk has been beaten down to mostly normal variation, but does not work well for projects where unknown-unknowns dominate. The team develops a list of all the anticipated technical problems and how they plan on dealing with that specific risk.
When the team is faced with complex projects, there are four key components of the response. It is incumbent on the project manager and senior management to understand project risk, the time-dependent nature of that risk, and how the proper project management tools need to change based on the nature of the risk. The author proposed that market or environmental uncertainty is typically related to ambiguity or volatility. They should utilize customers, noncustomers, the supply chain, and employees from various functional groups extensively at the front end. On the back end of the process, more ideas should be kept in play during screening and there should be broad participation in the process to help make adjustments to the plans quickly. In those cases, the project manager and team will need to maintain a very flexible attitude and be willing to improvise as they go.


The bottom represents the technology foundation components, integral to a PLM solution, that are used to construct the core functions that rest just above them. The orange line outlines Product Data Management (PDM), which is typically used for basic CAD file and Data Management.
Try CentriQS complete task management solution for planning, tracking and reporting tasks, projects, and schedules. This checklist is a practice-oriented plan of actions necessary to prepare and mobilize all functional areas of your organization around a new product start. From a technology standpoint, this would include for example new products which are extensions of existing technologies, products that exist currently in the market but are new to that firm, and finally more radical, new-to-the-world products. As a result, an extremely important organization skill is knowing how project characteristics, and particularly project risk, impacts project management. In my experience in the analytical instruments business, we often dealt with complex systems based on the fact that the project included all new embedded and upper level software that interacted with multiple electromechanical sub-systems and where the needs of customers relative to the user interface were not well defined. For many products and technologies, this will be a project management skill that develops within the organization over time.
These traditional project management tools work well for projects where risk is primarily normal variation and the specific tasks required to develop the product are clear.
In this methodology, task sizes are estimated at a 50% confidence level: half the time the task will take longer and half the time it will take less time.
It will likely influence how tasks are scheduled so that those issues where there might be the most uncertainty are addressed as early as possible in the project. Just knowing that they are a part of a project will require the intuition of your senior technical staff. Process concurrency is the partial or completely parallel execution of specific tasks and activities during the project execution.
For many projects, the product that will be launched will be targeted to customers who are already very familiar to the firm. This will extend beyond the engineering team responsible for the technology development, but also to the role of management, product management, and marketing. In ambiguous environments, the signals coming from the market are open for interpretation: they are just not clear. The whole idea is to move rapidly to narrow the solution space, but keep options open for as long as possible to respond to the changing signals from the market. In these types of projects, especially when you overlay a high level of technological uncertainty, you are dealing with a new-to-the-world, radical innovation.
All projects start out with relatively higher levels of risk and risk decreases the closer you get to project completion. New Product Development: Impact of Project Characteristics and Development Practices on Performance. The core functions are then used to build applications, which enable business solutions to be built that incorporate best practices, methods, and processes tuned to meet enterprise requirements. Increase productivity of your small business or office by better organizing your employees' tasks and time.
A company skilled at running projects that are incremental extensions of existing products might find that managing a radical, new-to-the-world project is a new skill set that has not been fully developed.
The first, and probably the one that most project managers will be familiar with, are variation along with foreseeable uncertainty. Project risk is higher when you are dealing with complexity, and in my experience, project schedules are more uncertain. It is common to face this type of risk if you are dealing with a technology that may exist, but is new to the firm, or is a new-to-the-world, radical technology.
The second point is that in many cases highly complex systems in and of themselves will lead to unknown-unknowns.
It will influence, for instance, the need for senior management to understand project risk and to make sure to match the project with the right project manager: just another reason for senior management to be highly engaged in the NPD process. For instance, as prototypes are built and integrated, the focus should be making the system fail.
If faced with this type of risk, the two fundamental tools are “iterate and learn” and parallel trials.
For instance, developing new manufacturing processes concurrent with development of the product.
While these stakeholders are involved with every project, their role is even more important in projects where there is significant market risk. Senior management who might have firm opinions on how to proceed should be careful not to influence the debate and airing of various ideas during the front-end activities.
It is crucial that the project manager and senior management recognize the nature of project risk. In other words, you have no way of knowing how complex systems will interact and what the problems will be. You compensate by adding a project buffer to the end of the project to protect the critical chain and feeding buffers for tasks that feed the critical chain.


You start with a certain level of risk at the beginning of the project, and as the project progresses, questions are answered, and risk is reduced. It is only through system failure that the team can ferret out how the various system components interact and where the weakness might be. Iterate and learn is essentially a “plan-do-check-act” cycle repeated multiple times until the questions have been answered.
Team integration relates to nature of the team itself and is typically exemplified by a core team concept that includes members from all functional groups. In these projects, the focus will be primarily on the nature of the technological risk and managing the project accordingly. Their research focused on the important factors that lead to new product success when dealing with these two different types of market uncertainty. The concepts discussed previously concerning “iterate-and-learn” and parallel trials might make sense in these types of environments. Recent research (9) confirms that in those cases, the concept of an autonomous team structure, or new venture unit, may be best.
The specific risk profile will influence how the project is managed in many ways as addressed in this article. Maybe the product will be introduced into a market that is very well understood by the firm. Whenever someone estimates how long a task will take, that estimate is really a statistical entity, not a single number (3). Finally, a project manager has to understand that the risk factors will change as a function of time. Risk lists are a good technique to help focus the team on foreseeable uncertainty and how the risks will be mitigated. Maybe for instance, it is best to get a beta product into the hands of a few customers, test the response, and continue to perfect the product concept.
In that team structure, the team is led by a senior manager who has a high degree of organizational stature. At the beginning of projects with high levels of complexity and unknown-unknowns, the risk will be very high, but as the project progresses, and the fog clears, then normal task variation will start to dominate. First, you have to focus the resources to start the tasks when required, especially those on the critical chain, and ensure those resources are not suddenly diverted to other tasks and projects.
If a culture exists that penalizes teams for “good failure”, they will be more likely to unconsciously resist trying to make the system fail so they do not have to deliver “bad news”.
Project success is not always about maximum team integration and process concurrency, as typically assumed. The entire team report functionally to this manager, and they are typically co-located and dedicated full time to the project. In the case of a product that is based on technology that is new to the firm, but is being supplied by a competitor for instance, the firm may or may not be familiar with those customers. For instance, for product extensions with little uncertainty and low complexity, a high degree of process concurrency and a very simple team structure is best.
A recent article about Starbucks illustrates how they use this exact concept in dealing with market ambiguity (8).
Finally for a radical, new-to-the world product, it is more likely to be sold to a new customer base, or there may be little knowledge on exactly how the product will be used by customers once introduced.
These are technical challenges that the team can envision they might face that could impact the schedule. For instance, if there are three prototypes being tested, and one provides odd results for a specific test protocol, it may be very easy for the team to disregard this result without fully understanding why it happened.
Anything that is not accounted for in normal variation and foreseeable uncertainty is what is termed residual risk. In complex systems, it is not uncommon for these anomalies to resurface late in the project, severely impacting the schedule. The point is that the amount of project risk also influences other decisions on how to manage projects.
Residual risk could in fact consist of the second and third types of risks described below, but for many projects, especially incremental extensions of existing technologies, variation and foreseeable uncertainty dominate, and residual risk is small. The organization needs to understand that when dealing with highly complex systems, schedule uncertainty is a significant factor, especially early in the project. The authors note that in many cases, managing a project as proposed above to deal with market ambiguity may in fact slow down the project, but lead to a higher chance of new product success. Finally, you need to rely heavily on your most senior technical personnel and defer to their judgment. They will likely be in the best position to most efficiently solve the vexing problems associated with complex systems.



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