Navigating the Phases of Product Development – a Highly Underestimated Challenge

Why do so many product projects go awry, stretching beyond their planned timelines and exceeding budgetary limits?

Why do numerous companies find themselves in a difficult situation and are forced to cut costs due to profitability not meeting expectations?

This is already happening today, even if the momentum of change is only just beginning to accelerate dramatically.

More often than not, the root cause lies in how the product is developed and managed.

For this reason, it is necessary to comprehend the process of product development throughout the entire life cycle, including the phases of product development.

The errors in the past must be recognized and lessons learned must be implemented, while simultaneously improving, expediting, and future-proofing the product development process to ensure its sustainability.

Does that sound familiar? Does it resonate with you?

There are numerous books and decades of research dedicated to the topic of the product development process. Nevertheless, things go wrong time and again.

Here, I aim to present my perspective on the issue.

Much of what I share comes from my personal experiences over 30 years of product development, while other insights have been gained from observations. Some align with conventional teachings, while others may be considered somewhat unorthodox.

This article provides you with an overview; in subsequent articles, I will examine stages of product development in detail.

You can use the text to reflect on the situation in your environment and identify requirements for action, as well as potential measures for improvement.

The ultimate goal is to provide you with insights that contribute to the success of your products, your company, and last but not least, your personal success as well.

What is a Product?

This is indeed a question of significant importance as it sheds light on the core subject of the matter at hand.

Let me present to you my definition of what constitutes a product:

A product is an item or a device that fulfills a desire or solves a problem.

A product always serves a purpose; without one, it becomes obsolete.

The intensity of the desire or the severity of the problem that the product addresses directly influences the customer’s valuation of the product.

Or, as Martin Daum used to say:

A great product is characterized by the fact that the customer happily separates himself from his money.

Martin Daum, CEO of Daimler Truck AG

In its essence, a product gets exchanged for money, thereby forming the cornerstone of the financial prosperity of any commercial venture.

Product or Service?

Some draw a distinction between products and services, suggesting an inherent difference between tangible, hardware products and intangible, software products or services. However, in my perspective, this is not a valuable or meaningful distinction. In my opinion, a product needs to be understood and appreciated as a holistic solution, a complete package that delivers value and satisfaction to the customer, regardless of whether it is tangible, intangible, or both.

If you notice this division within your company, be vigilant to ensure that the Hardware Department and the Service Department do not build their separate silos at the expense of the customer.

However, this understanding of the product should not obscure the fact that the development of hardware and the development of software or services have different boundary conditions and therefore justify different processes. I will come back to this again and again.

Product Variants

Often, a company’s product consists of a variety of product variations.

Product variance is often referred to as product complexity.

This is a concerning sign as it suggests that the organization may struggle to manage the existing level of variance. To fix this issue, there are two options.

I have struggled with this issue for many years and will provide a detailed explanation of my insights in dedicated articles.

Phases of the Product Development Process

Here we are, exploring the Product Development Process.

Let’s first take a look at the entire process before I go into the individual phases.

When discussing product development, we frequently focus on the activities of product developers. However, it is crucial to pay attention to how the product itself develops.

The Product Development Process is a long-term commitment.
It begins right at the inception of the company, or sometimes even earlier, and doesn’t conclude until the company ceases operations. It’s a continuous, relentless cycle that’s integral to the company’s operation.

The Product Development Process is one of the core end-to-end processes in a company.

At the beginning of the PDP, two paths should run in parallel.

One path is technology-focused: exploring, evaluating, planning, and preparing the technological aspects of the product.

The other path is customer-focused: investigating customer needs and shaping the product’s structure to address them.

These two paths converge, leading to the actual product realization.

At this point, an economic evaluation takes place.

The objective of this evaluation is to ensure that the outcome of a product creation project not only meets customer needs but also contributes significantly to the company’s financial prosperity. It’s a crucial step that ensures the product is technically sound and economically viable.

In the later course of the process, the customer needs to be accompanied during the usage of our product. We need to take care of any problems that arise and gain inspiration for new product updates.

Everything is happening simultaneously.

At regular intervals, results from the earlier phases need to be reviewed and utilized to initiate a new iteration of the subsequent stages of the process.

In the past, businesses could afford iterations that took a considerable amount of time. For example, in the automotive industry, large product updates could plan years for every iteration. These lengthy intervals were acceptable and even common.

However, in today’s fast-paced, dynamic business environment, the timeframes have drastically shrunk. We’re now talking about intervals as short as quarters or even months.

The overall product development cycle shortens as well.

Not only must the intervals within the development process be shortened, but the entire development time, from the determination of requirements to the provision of the product for the customer, must be significantly reduced.

To enable these shortened development times, three approaches are helpful:

I will discuss this change in more detail in upcoming articles, exploring its implications and examining what it means for businesses to adapt.

Product Development Phase: Product Strategy

The product strategy should cover the following key points:

> Define and understand the target customer.
> Identify the requirements from the use cases that are to be addressed.
> Determining the product’s monetization approach.

This is an endless exercise, as the world is continually changing. Customers and their problems evolve, expecting ever-new solutions. Also, the competitors do not sleep and drive progress relentlessly forward.

The last question is for many businesses somewhat new.

In the past, it was clear:

The product has been offered at a reasonable price and the customers have paid the price. In the future, this will not be self-evident anymore. New monetization models will emerge.

To find the right answers, methods of market research can be used. The product vision from the context of agile product development also provides useful tools.

Core Product Value

While the answers to the aforementioned questions must be consistently reviewed, updated, and re-communicated, there is a crucial piece of information that needs to remain unchanged:

The company’s purpose and the core value of the product need to remain consistent over a long period of time.

Product development is a challenging adventure where many decisions must be made, and compromises need to be found. Making all decisions and compromises centrally is not possible. It is therefore necessary to give the organization a value that ensures decisions that lead to the creation of a product that is consistent with a clear brand value and thus meets the customer’s expectations.

This core value must be consistently communicated within the company, and the management needs to lead by example. If done correctly, communication with the customers is not necessary, as they will experience these values themselves during the use of the product.

Some companies behave differently; they communicate with the customer but fail to deliver as promised. This situation must be prevented without a doubt.

You might have noticed that I consistently use “Core Value” and not “Core Values.” This is intentional.

While various values may be important for the brand, it is crucial to identify the singular value that takes precedence and surpasses all others when necessary. Only through this clear focus can the product acquire its distinct character and identity.

Competitive analysis and product positioning.

Evaluating the competitive position is a vital element of product strategy.

This entails anticipating the future development of competing products and defining the future target position of the own product accordingly.

I will elaborate on this in a separate article, delving into the details and discussing the work with customer buying criteria, unique selling proposition, and product feature management.

These pieces of information are crucial for the subsequent steps in the product development process.

Product Development Phase: Research

Many development departments bear the name “Research and Development”. However, not all of them actually engage in research.

Technological leadership serves as a lever to attain a favorable competitive position, and research is a prerequisite for achieving this objective.

Big companies can afford to invest in own research activities and keep the results confidential. This is the gold standard. While a technological unique selling proposition is not permanent, it does help keep the competition at a distance.

A more cost-effective alternative is to collaborate with universities and research institutions.

Investments in research are often undervalued, as the outcome and payback period are difficult to predict. It requires entrepreneurial foresight to strike the right balance.

Large companies with diverse business segments have a significant advantage in this regard, as research often yields results with business potential across various very different applications. The payback probability does increase with the size of the company. This fact is often neglected by investors, who demand short-term flexibility in their investment rather than long-term success.

Technology Road Map

To be able to invest purposefully in research, certain operational prerequisites must be in place.

One important prerequisite is a technology selection process, which results in a technology roadmap.

By the way, research does not necessarily need to be limited to product technology; manufacturing technologies, marketing, and other areas of the company also offer valuable business opportunities that can benefit from research.

Product Development Phase: Advanced Engineering

Advanced Engineering (Pre-development) ensures the feasibility of new product concepts and prepares research results for product creation projects.

The advanced engineering phase is essential for efficient product development. It ensures that development loops are cost-effective and timely flexible.

With new concepts and technologies, development loops are inevitable as unforeseen challenges arise and need to be addressed.

In product development projects, when different departments work simultaneously, development loops cause high inefficiencies. Work outcomes of large groups become obsolete, requiring extra efforts for rework. These loops also lead to overplanning activities, that consume resources, and disrupt connected product projects, causing further inefficiencies.

It is therefore important to avoid development loops in product realization projects.

Product Concept Study

Product concept studies are not meant for production but serve to offer insights into the application of new technologies in a customized product.

While these studies sometimes appear at shows and exhibitions, that is not their primary purpose.

Most of the time, they are much less spectacular, than the example shown in the picture above.

They provide crucial information regarding:

Not every product development project necessitates a dedicated concept study. One concept study can benefit multiple projects. However, it is an essential step in progressing from the idea of a new solution to a reliable and profitable customer-ready product.

Maturity level improvement of components and subsystems

Typically, products consist of subsystems and components. Ideally, these are already known, and the novelty lies in a clever combination of existing elements.

However, often subsystems and components are also new and innovative. This bears the danger of an accumulation of technical risks that make a development project unstable.

To avoid this problem, these subsystems and components should always have a higher degree of maturity than the end product to be developed. This is achieved through a component development project that precedes the actual development project.

The challenge here lies in the timing of investments. The project decision for the component pre-project must be made before the project decision for the product project. However, at this point, many commercial input data for a business case are not yet available. Nevertheless, an entrepreneurial decision must still be made.

It becomes even more challenging when suppliers are involved.

Product Development Phase: Product Architecture

The product architecture is applied in two perspectives.

Firstly, it involves rules and interface definitions applied within a product variant, serving coordinated and efficient product development.
Secondly, these same rules and interface definitions applied across the entire product portfolio variance ensure efficiency through modularity and risk minimization.

This architecture can occur in various forms and types. I have good experience with a “Product Master Document” in combination with various add-ons for special purposes.

For consistency, someone needs to take charge of this document and oversee its continuous maintenance and updates. I will revisit this topic in later articles, as it holds significant importance in the context of product development.

Product Development Phase: Product Justification

In the product justification phase, the primary aim is to establish and decide the objectives for a product creation project.

This follows the conventional approach, an approach that operates under the assumption that it is of vital importance to determine at the outset what the desired end result or outcome should be.

However, it should be noted that there are different perspectives on this topic, such as the agile development approach, which takes the opposite view. According to the agile development approach, the goal or objectives aren’t static or fixed from the beginning, but rather undergo a process of evolution and refinement as the work progresses, adapting to new insights and challenges that emerge along the way.

In this guide, I will stick to the classical approach, shedding light on its mechanisms and justifications.

Additionally, I will also engage in a discussion about when and why I believe that this approach is the correct one to use, drawing on my own experiences and knowledge.

Due to the detailed and comprehensive nature of this explanation, I have decided to dedicate a separate article to this discussion, to ensure that each aspect is thoroughly and thoughtfully explored.

In many publications, you will get this step explained as part of the product creation process, which I state as the next phase.

For me, it is a separate phase in the product development process. The reason is simple.

At the end of the Product Justification, there is a project decision, which is a logical beginning for a product creation process.

This is how it is often lived in daily life. I confirm this with years of experience. At the moment the project is decided by top management, the way of working changes significantly.

The product justification phase again can be divided into two consecutive steps.

Concept decision

After the requirements for a new or improved product have been identified in the previous phases, it is now time to develop and define the specific technical and economic concept.

This work is essentially the search for the right compromise. The concept decision needs to be made:

The concept phase ends with a product, production, sales, purchasing, and financial concept, which is then specifically implemented in the phase of product creation.

The granularity of this concept is a fine line.

It must be detailed enough to avoid misunderstandings and development loops, but open enough not to restrict the search for the best solution.

Call for planning

The decided concept now forms the basis for a call for planning.

The planning results in a master schedule, a resource planning, and a viable business case.

At the end of this phase, it is clear how the project can proceed in terms of both schedule and finances.

Now is the time to make the first solid commitment:

Product Development Phase: Product Creation

Okay, the goals are clear now. It’s time to implement them.

The product creation phase results in a customer ready product, that fulfills the project objectives and gets delivered to the customer in time and quality.

I’ll be short here because this topic is big, and more articles will cover the details and specific steps later.

Just a sneak peek for now:

A product development project goes through several stages, systematically increasing the maturity of the product.

Each stage follows the same process of definition, creation, validation, and implementation.

Product Development Phase: Product Maintenance

Now, customers have the product in use and hopefully, they are delighted and extremely happy.

Realistically, there is a very high likelihood of issues arising during customer use that need attention.

Product maintenance requires a short response time and therefore a fast and nimble process and resources, that come into play during this phase.

We will have to discuss, how this process can be designed.

Typically, there are three drivers to be addressed during the product maintenance phase.

Quality assurance

If the product does not behave during use as promised to the customer, this is a quality problem.

In most companies, special resources and procedures exist that are only used to deal with quality issues. In the end, it still is a team effort to solve the problems.

If safety concerns are involved it becomes even more critical. Therefore all involved processes need to function seamlessly.

Customization

As soon as the customer is using the product, he will provide feedback.

There will be suggestions as to what could be improved in order to increase suitability for specific use cases. There will also be information on what competitive products do better.

This information has to be processed and decisions have to be categorized:

If the arrow hits the second of the three options, then we need the product maintenance process.

Financial and operational improvements

Things always go wrong, and many things don’t go as planned.

Here, too, we have to classify all problems into the three categories mentioned above.

Product Development Phase: Product End of Life

Every life has an end, including the life of the product we’ve just delivered to the customer.

It is important to plan and implement the predecessor-successor relationship properly so that customers do not experience any issues with a disruption in their business.

But we also need to clean up our systems, delete or archive old data, and scrap assets. In my experience, this is often not done with the necessary consistency, leading to significant inefficiencies accumulating over time.

If there are no processes and no rules, it will not get done.

Conclusion

I know this was a substantial amount of information, but it may not be sufficient to fully meet the challenge. So stay tuned as I go into more detail step by step.

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