Lean product development

History of Lean Product Development

Toyota started its journey with the Product Development part at Toyoda Loom Works (see History of Toyota) and not with the manufacturing part that became famous through the book "The Machine that changed the world".

When Toyota started developing cars, there was an enormous difference between its world and car companies in the USA. Toyota had few educated engineers and little prior experience. Car companies in US had the benefit of excellent engineering schools and a well-educated work force in the cities.

Toyota realised it needed knowledge in order to develop a car. It used experiments to acquire this knowledge — and this was the beginning of the lean systems Toyota uses today.

Allen Ward studied Toyota’s Lean Product Development system. He found another strong contributor to Lean Product Development in the US airplane industry.

For instance, the Wright brothers’ method of constructing their airplane became one of the legacies they passed on to the aviation industry. This approach enabled the USA to create one of World War 2's most successful fighter planes from scratch, in just six months.

After the war Toyota incorporated the airline industry's findings into its product development methodology.

Many Lean systems at Toyota

Today Toyota's Product Development system is called Toyota Development System (TDS), their Production system is called Toyota Production System (TPS), and sales and marketing is called Toyota Marketing and Sales System (TMSS), and the Total Management System (TMS) integrates all these systems.

Differences between Product Development and Production

In the western world "lean practices" is a subset of the total-TPS that Toyota has. There is some overlap between TDS and total-TPS and several of the basic principles and guidelines are applicable but several are not and focus might be placed differently for an organization transforming their current way of working to Lean Product Development.

One perspective gives that purpose of:

Product Development

Is to create new recipes for products that improve the life of the users. In product development we work with good practices and emergent practices. Cause and effect might be separated by time and space and there might not be identifiable root causes. Flow is only apparent on a higher abstraction level. An engineer sitting with his eyes closed could be creating value by thinking of a problem but it is hard to see from the outside.

Production

Is to manufacture products over and over again to agreed quality and cheaper and cheaper. In production we work with best practices and cause and effect are easy to discover. Flow and value is easy to see.

One of the main principles for Product Development is to create Reusable Knowledge while many of the lean principles are overlapping between Lean production and Lean Product Development their application and tradeoffs between them are not necessarily the same. In Lean Production a lot of effort is put into removing waste and making flow a priority that is not the case in Lean Product Development since even a nugget of reusable knowledge can potentially save the company large amounts of money in less design rework or higher user acceptance of the product more focus is put on creating more and more reusable knowledge that leads to increased value. Flow is not that visible in the product development environment so a higher premium is put on eliminating knowledge loss that comes from handovers. With complex products we always run the risk of rework loops and the later they come the more costly they become. Set-based design is a countermechanism against the uncertainty that comes from both using complex technology and having fickle markets.

Key learning about the difference between TPS and LPD

Key learning about the difference between TPS and LPD is summarized in the advice Jim Womack gives Harley Davidson's Dantaar Oosterwal; "Don't try to bring lean manufacturing upstream to product development. The application of Lean in product development and manufacturing are different. Some aspects may look similar, but they are not! Be leary of an expert with experience in lean manufacturing that claims to know product development"

The most common high level concepts associated with Lean Product Development are:

1. Creation of re-usable knowledge
2. Set-Based concurrent engineering.
3. Teams of responsible experts. Lean product development organizations develop integrated work teams with multiple competences in each team and reward comptence building in teams and individuals.
4. Cadence and Pull. Managers of lean development organizations reject the scientific management notion that managers plan, and workers do. Rather, engineers plan their own work and work their own plans.
5. Visual management. Visualization is a main enabler of management in LPD.
6. Entrepreneurial System Designer (ESD). The lean development organization makes one person responsible for the engineering and aesthetic design, and market and business success, of the product.

Creation of re-usable knowledge

Creating re-usable knowledge is one key factor in LPD. This is done with A3s, checksheets, limit curves, Trade-Off curves all with the support of LAMDA method and set-based design and is institutionalized with help of knowledge owners. It is the behaviour that needs to be fostered in order to create a system where all parts support and build upon each other.

Set-based concurrent engineering

Set-based concurrent engineering is to acknowledge that we have imperfect knowledge about the new product we want to design therefore we will be running multiple design options for our subsystems and aggressively remove the weakest solutions when we have the data to do so. During set-based design we will strive to capture knowledge in trade-off curves or limit curves or A3s. Set based design allows us to schedule innovative technologies into product design and not need to do expensive loopbacks in our design work if it is not possible to make the technology to work within our current constraints.

Results of LPD

It is not uncommon to:

Increase innovation X 10

Increase introduction of new products 400%-500%

In year 2000 Toyota launched 14 new products which is more than whole of GM. Toyota = 70,000 employees; GM = 360,000 employees

Applicability of LPD

Researchers divide product development projects accordingly to their need driver:

Wish - there is no such product on the market, only a wish for such a product. These projects can be on the edge of what is possible to do.

Want - there are only a few basic similar products on the market that usually require improvement.

Need - there are enough products in existence so knowledge about this is abundant on the market.

Example: In the 1990s the mobile phone was a Want product it was along the leading edge of technology then and today it is a Need product it is common on the market and there is plenty of knowledge so that even small companies can make a good mobile phone.

Product development methods can be classified accordingly how well they handle only stable conditions or if the method can also handle unstable conditions. Lean Product Development is a dynamic method of product development that works for unstable conditions where as many other methods like the stage gate model only works well for stable conditions.

Putting this together gives us an understanding of how why it is important to understand both need driver and if your projects are deemed short or long compared to market changes and have a product development approach that addresses the situation you face.