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Product Development Hand-Offs: Redesigning the Transition Process

The three questions every stage gate review must answer, the three cognitive biases that stand in your way, and the three simple changes that can fix it.

If you have been in the product development business for any length of time, you know how this story turns out. Executives walking out of the Product Review Board meeting are all slapping themselves on the back. The new product has cleared its final design review and is on its way to the prototype line en route to (eventual) full-scale manufacturing.

No one seemed to notice that the VP of Manufacturing sent a first-year production assistant to represent him. The Supply Chain Director declined the meeting. Was she on vacation? No one seemed to remember. The head of Compliance brought up some issues with global certifications, but no one seemed to want to rain on the parade, and he quieted down.

At the PRB meeting six months later, no one was happy. No one in engineering considered supply chain constraints. The Bill of Materials was full of prototype parts that weren’t ready for full production – or worse, parts very near end of life. The team already needed to do a board spin. No one bothered to bring early versions of the product to the production floor to get their opinion (at least, no one took those meetings seriously if they did occur). It came as no surprise when the clamshell wouldn’t close at the end of the line.

There was no way they would meet their sales targets. Someone was going to get fired.

This was a disaster. Unfortunately, it’s not that unusual. But it is preventable.

Ineffective transitions between product development stages result in lost time, lost revenue and reduced market share. And those are only the impacts you can explicitly measure. Additional negative impacts include poorly received products, political infighting inside your organization, and potentially unfavorable market perception. Those effects may not be as easy to measure, but they are just as real – and often more damaging to your organization in the long-term.

Bluntly, transitions are broken. The PRB process has proven largely incapable of guiding high-risk transitions between product lifecycle stages. We have highlighted the design transfer process above, but that is hardly the only place transitions fail. How many poor concepts never see the light of day in design? How many times have you seen a bungled end-of-life or product sunset, only to anger customers who have no replacements and no options?

Ideally, the transition process is a coordinated, structured review with all the major stakeholders involved in the product development effort. The objective is to catch issues before they make it into the next stage of development. The process can never foresee all issues—who knows what will happen in the market outside of transition stage gates?—but a well-attended and vigorous transition process prevents the OEM from tossing garbage over the fence. Effective transitions also help prevent bad ideas from continuing along in the process. Think Iridium satellite phones in the dawn of the cell phone age.

Most products fail. You already know that. Frankly, many of them *should fail* before they reach the market – it is cheaper that way. But any way you slice it, the true root cause of product development failure in many organizations is not a product intentionally canceled, or a change in market conditions. It’s a failure of the transition process (and its associated PRB mechanisms inside many organizations) to efficiently shepherd products through the process.

Here’s what’s broken.

The transition process is too complex. This may seem like a paradox: The transition is the one place where you *should expect* a fair amount of complexity. This is the time when you invite multiple parties into the process to review the product’s progress from their own unique perspective, weighing in on critical issues that likely are outside of the core team’s area of expertise. Obviously, those people who will make up the new “core team” once the product transitions must take an active role.

What turns this good complexity on its head is the lack of focus. Effective transitions focus on three critical questions, and three questions only:

  1. Does the product or service still meet a customer need? How many times have you seen a product continue through a stage gate that will be obsolete the day it is launched? This is the time to fix it. Marketing and sales roles should take the lead here.
  2. Is the product still operationally and technically feasible? It is not simply a question of “can we build it?”, but also “where should we build it?” and “can we reliably source the parts to build it?” Supply chain and operations leaders must lead the discussion here.
  3. Does the product still surpass its financial hurdles? Your finance team should lead an impartial discussion and review of the assumptions used in scenario planning and business modeling.

Anyone familiar with the concept of user-centered design should immediately recognize these three questions and their role in the transition process. Only positive answers on each question will lead to the best chance of a truly successful product in the end. Failure to focus the transition process on the essential elements leads to a rigid, bureaucratic meeting where participants politick and jockey for position. The collapse of effectiveness creates momentum to carry products forward to manage and nurture personal relationships rather than focus on the needs of the product. It’s a mess, and we all know it.

So why don’t we focus the transition process more effectively?

As is the case in most human institutions, cognitive biases stand in our way. They are obvious in retrospect, but surprisingly insidious in daily practice. We saw a few even in our brief example at the beginning of this article. Sunk Cost fallacy was on display: No one wanted to hear that there would be problems later – the company already had invested tremendous resources. What followed as a natural result was Information Bias: The hunt for “more information” even though everyone in that room already understood the problem. Finally, we saw Framing Effect. The first meeting was framed as a success (with negative information dismissed). The second meeting was framed as a failure (with potentially easy solutions equally dismissed).

Understanding the complexity inherent in most transitions and the difficulty in focusing on critical areas, three changes to your PRB process will greatly improve the effectiveness of your transition process:

  1. Redesign all PRB meetings to focus on the three critical questions: User need, operational feasibility, and business impact. Different parts of your organization will use their unique expertise to guide those discussions, but keeping the meeting focused on those three areas will simplify a complex process.
  2. Convert the PRB meeting from an “opt out” process to an “opt in” process. Many PRB meetings are simply rubber stamps from one stage to the next. Positive momentum may not ruffle feathers inside your organization, but it does not give you the best chance for success. In other words, your product development effort must prove itself at each stage to receive funding to move forward. The decision is “fund”, not “cancel funding.”
  3. Hire an outside arbiter to conduct the meeting and/or provide evidence. As we discussed, cognitive biases and organizational culture often can stand in the way of effective transitions. Hiring an outside firm can free your internal teams from the relationship issues that crop up during high-risk/high-stress transitions.

The product development process is difficult. No one denies that. In fact, only a small fraction of new product introductions provide a positive return on invested capital. Far fewer provide a good return on that investment. While not the only root cause, ineffective transitions are the single most avoidable cause of product delays and under-performance. With a few simple changes, you can avoid these pitfalls and give your product development effort the best chance for success.

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