Creating an equivalency of expectation in the nature and output of Product Development with Production leads to frustration and disappointment
My work as an independent consultant provides rich opportunities to interface with senior-level business leaders, particularly in the technology and operations realms. This is a privilege, and always educational. Because my own focus is on product development, and that of the business leaders normally is not, there is a specific conversation I find myself having on a regular basis. It starts with the business leader saying something like:
“Hey, when I buy a Camry, what I expect to get is a Camry. Not a lot of discussion about the Camry costing more than originally quoted, or ‘could you live without the air conditioning for the first few weeks you have it on the road?’”
This statement alludes to painful experiences by the leader with Product Development projects in the past, including overruns and the need to de-scope features along the way.
This is a valid perspective, particularly coming from a C-level leader. Unfortunately, it signifies a fundamental misunderstanding of the differences between Product Development and Production. If we can’t unwind this misunderstanding, every Product Development project will be at risk of the kinds of frustration and disappointment articulated by the leader in the statement above.
To embrace the analogy, Toyota has invested decades learning absolutely everything there is to know about building Camrys. Their profitability on the Camry line is measured in millimeters of weld margin and seconds of assembly line throughput. Production is a game played by vigorously limiting the number of variables and exerting maximum control over those that remain. At its root, Production clearly understands and has deep experience with every facet of the process to convert raw materials into a finished product. Toyota has been manufacturing Camrys since 1983. They have the process completely wired at this point. That is the essence of Production.
Product Development represents a very different scenario. While we might be leveraging tools, platforms, processes, and target markets with which we have familiarity, the whole point of Product Development is to assemble, integrate, and customize these in a new context to derive a new outcome. “Yes, we have done this before. But we’ve never done it here, with your platform ecosystem, organizational structure, data portfolio, and political environment. And those attributes represent a whole lot of variability.’” From this perspective, it is clear just how different Product development and Production truly are.
“Yes, we have done this before. But we’ve never done it here, with your platform ecosystem, organizational structure, data portfolio, and political environment. And those attributes represent a whole lot of variability.”
Extending the Toyota analogy, a more apt comparison for Product Development than the Camry assembly line would be the Toyota Racing Development [TRD] research & development program. While specifics of Toyota’s TRD investment are not shared publicly, the capsule history found here: https://www.autotrader.com/oversteer/what-is-trd provides some context for the breadth, depth, and longevity of the program. Similarly, this press release [ https://pressroom.toyota.com/toyota-earns-most-rd-patents-among-automakers-in-intellectual-property-owners-association-rankings-for-8th-consecutive-year/ ] related to patent awards includes the quote, “Toyota invests over $1 million in emerging technology globally and has invested over $1 billion in R&D related to automated vehicles and robotics since 2017.” All of this demonstrates that Toyota, my business leader’s example of efficiency at the top of this post, is not only expert in Production but also invests heavily in Product Development.
Learn Today to Earn Tomorrow
Product Development and Production are different games, with different rules and different goals. Creating comparisons between the two is unhelpful, and can be the source of unrealistic expectations. Product Development is inherently risky [SEE ALSO: https://drewharteveld.medium.com/first-lets-not-fail-19756f4bcd58 ] and requires a wide margin for learning-based change along the way. This doesn’t mean the Wild West. Those experienced in Product Development, regardless of industry, know how to execute these projects in a manner that is organized, controlled and transparent. But what it does mean is that if you are a business leader who expects your Product Development projects to roll forward like Camrys rolling off an assembly line you are in for a load of disappointment.
This doesn’t mean the Wild West. Those experienced in Product Development, regardless of industry, know how to conduct these projects in a manner that is controlled and transparent.
There’s an old saying in Product Development that we ‘learn today to earn tomorrow’. This can be interpreted in two ways. First, it would be prudent to not think of your Product Development initiatives as strictly profitable in the near term. There are simply too many unknowns to accurately estimate the cost to reach the target vision, as well as profit that can be harvested once the product is in place. This is why so many smart companies employ an iterative approach to product development — investing in multiple, small-scale initiatives to prove the many facets of a concept before going all-in on productionalization. The other interpretation of the quote is that if you choose NOT to learn today, you will be challenged to earn revenue tomorrow. Our industries, target users, and the larger marketplace are always in motion. While product development may demand inconveniently wide margins for learning and change along the way, few enterprises can afford to opt out of the pursuit completely while still retaining market share and relevancy.
Play the Game
Given that equation, it makes sense for business leaders to clearly understand the opportunities and challenges of engaging in Product Development, investing in the people, processes, and tools necessary to do it well. Conflating Production with Product Development, and expecting a similar performance profile from each, is a recipe for frustration and disappointment. Scrub this mindset from your leadership team, recognize Product Development for the bargain it represents, and gain expertise in executing these projects effectively to propel your enterprise forward.