This document discusses ways to innovate successfully under tight resources and constraints. It emphasizes the importance of getting innovations right the first time due to short market and intellectual property windows. Key aspects discussed include properly defining the scope of the innovation, targeting features that are sufficient but not excessive, and optimizing features, quality, schedule, flexibility, maintainability and cost. The document also discusses the importance of vision, preparation, process, flexibility, focus and engagement across functions for successful innovation.

1. April 20th, 2012
GETTING IT RIGHT THE FIRST TIME
MARK MUNDAY, CTO ELSTER GROUP

2. Disclaimer
Ecclesiastes 1:9
“What has been will be again,
what has been done will be done again;
there is nothing new under the sun.”
An interesting quote for an innovation conference –
hopefully there are a few new things under the sun, however…
Not much today,
Much of this presentation is not original with me, but unfortunately
I do not remember on whom I am building, or from whom I am stealing.
Also Note: I will use some hyperbole today to provoke thought…
Please don’t hold it against me.
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3. Elster Group (NYSE ELT)
Major global provider of Electricity, Gas, and Water
Measurement & Control
Metrology, Control, and Utilization
GAS ELECTRICITYEnabling
Conservation,
Smart Metering, AMI, and SmartGrid Efficiency,
Choice
global global global in cumulative
Communications & Energy Management
market share market share market share shipments
2010 REVENUES: $1.8B, R&D: over $100M
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4. Why Innovate?
Make a product?
Cost Improvement?
Use new technology?
Complete a project?
Have something to sell?
Keep up with competition?
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5. Why Innovate?
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6. Innovating under Tight Resources
or Financial Constraints
Almost all innovation in today’s business is under tight
resources and financial constraints
 The days of huge corporate R&D centers are gone
 Investment impacts are measured in financial quarters $
Investment is still good, but payback needs to be clear
and almost certain
Need to get it right the first time!
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7. Get it right the first time
Common complaints;)
 Specifications were too thorough
 Development estimates minimal development cost
 Development included too many features
 Development was too fast
 Development costs came in below projection
 Product did not require enough changes in manufacturing
 Product cost came in below projections
 Product/system is too simple to use
 Product is just what the customer told us
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8. Get it right the first time
Why?
 Market windows do not stay open long
 IP windows are defined well ahead of the market window
 The greatest cost/time impacts is doing something again
Making an engineer 10% more productive is great, but
it is not a matter of life or death for most businesses
Missing a market or IP window can be a matter of life
or death for a business
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9. Getting it right the first time!
Hinges on the definition of “It” and “Right”
“It”
 A commercial product is great, but…
 The focus is on sustainable profitable business growth
 “It” is processes that align the business to sustainable offerings
(as budget and timing permit)
“Right”
 Similarly, perfect is great, but striving for perfection is dangerous
 The target is to Be Sufficient, but Not Less!
This is not mediocrity!
This is ultimate knowledge of the market and the business
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10. Getting it right the first time!
Target to Be Sufficient, but Not Less!
Some of you are still thinking I am talking about a product
 I am not!!!
 I am talking about your innovation that will drive your business
However, products (including systems) should have…
 Features target customers will value and no more!
 Quality target customers will value and no more!
 Schedules meeting the targeted IP and market windows!
 Flexibility for reasonable requirement changes and no more!
 Maintainability for reasonable changes and no more!
 Cost target customers will pay for and no more!
Generally; Features, Quality, Schedules, Flexibility, Maintainability,
Cost, and even Process must be optimized with each other
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11. Waterfall Development Process??
 New product idea
 Start requirement process
– Detail commercial requirements
– Look for technology
– Research any new technology
– Detail technical requirements
– Start the design
– Early testing
 Validate Requirements
– Prototypes
– Talk with customers
 Design finalizes
– Massage and complete design
– Finalize testing , qualification, and any certifications
 Determine how to market the product
 Determine how to make the product
 Source tools and parts
 Product succeeds or fails in the marketplace
Process improvement focus: Concurrent manufacturing and marketing engagement
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12. Market Offering, M arke t Exploration
Not a Product Busine ss Dire ction
Market Opportunity Identification
Product or Project Opportunity Definition
Development Opportunity Approval & Prioritization
Resource Allocation
Syste m/Product Introduction Re quire me nts / Plans:
Systems, Services, Products, Logistics
De taile d Product Re quire me nts / Plans
Te chnical Re quire me nts / Syste ms Engine e ring:
Architecture, Rough Design, Make or Buy?, Logistics
Software Software Supply Information M arke ting
Firmware Firmware Logistics Logistics Logistics
(M anufacturing) (IS)
Hardware Hardware
Facilities Styling Sales/Support
Personnel Pricing Facilities
Detailed Spec. Detailed Spec.
Suppliers Order Entry Personnel
Design Design
Tooling Customer Specs Introduction Plan
Component Test Component Test
Documentation Labeling Advertising
Product Test Product Test
Materials Third Party Info Samples
Documentation Documentation
Training Cust. Reports ABB Training
Certification Certification
Admin Reports Cust. Training
Review Review
Documentation
Syste ms Te st Supply Ve rification
Inte gration (Pilot) M arke t Introduction
Re le ase / De v e lopme nt Hand-off / Introduction Comple tion
Life
Supply Planning, Resource Adjustments
Manufacture, Support
Releases, Improvements, Styling
Field Issues, Customer Support
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Obsole sce nse

13. Product Introduction
System/Product
Introduction
Project
Development
Project(s)
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14. Verbalized Top Complaints
Development:
 Is taking/took to long!
 Had too many bugs!
 Designed the wrong product!
 Wants me to give them a prioritized list!
Sales/Marketing:
 Doesn’t know what it is doing!
 Keeps changing their minds
 Can’t manage the customer!
 Requirements come from the competitor’s latest brochure!
 Will not give me the priorities!
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15. Agile Development Process??
 New product idea
 Start product development
– Generate core requirements
– Look for technology
– Research any new technology
– Start the design
– Early testing
 Requirements refinement
– Prototypes
– Talk with customers
 Design iterates
– Massage design, and retest on fly
– Complete design and any certifications
(May re-start development. May abandon the development)
 Determine how to market the product
 Determine how to make the product
 Product succeeds or fails in the marketplace, but iterated enough to succeed???
Process improvement focus:
 Completing subtasks
 Concurrent manufacturing and marketing engagement
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16. Six core issues impacting Innovation
• Development working in a vacuum
– Developing what they think is right without a strong tie back to the market and business
– Designing for current competitor products, and not future customer needs
• Commercial specifications are unrealistic or incomplete
– Too much time working the impossible , typically results in development and product/system costs being
too high.
– Or development doesn’t understand the details behind the customer use and hence misses critical needs
• Basic research not being done and a competitor surprises the industry
– Fundamental research takes longer than most projects have
– Fundamental research done within the project may be implemented incorrectly with field problems
• Development generates a product without planning the system
– Needed tools are missed , delaying product acceptance
– Or worse, the product is unacceptable and must be re-architected
• Development missing sufficient abstraction
– Designs for a specific product with limited planning for future products or variations
– Causes major redesigns of products and system with each new feature
• Many times there is no organization to handle the day-to-day issues of customers,
sales, supply, manufacturing, and projects.
– Development is interrupted repeatedly in its projects
– Many times with major issues taking weeks or months.
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17. Getting it right the first time!
Requires
 Knowledge
 Industry
 Business
 Technical
 Vision
 Guts
 Preparation
 Process
 Flexibility
 Focus
 Engagement
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18. Customer Satisfaction (Prof Noriaki Kano Model)
 Not enough to ask what Satisfaction
customers want! Exciting
 Must be there: Expressed
 Knowledge of their
business
Features
 Matching offerings
to their unexpressed
needs! Expected
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19. Vision and Disruption
Example below: Mechanical produce with…
 Numerous enhancements and cost reductions over 60 years
 Very happy customers, and dominated by 2 suppliers
 Very cost effective - Renowned for high quality and performance
 Intricate product with industry accepted compromises
 Electronics came along, led by non-dominate player
 Reduced some industry compromises and added testing features
 Initially; more expensive, less reliable, and harder to read
 Shortly; eliminated original product by dramatically reducing compromises, adding
features, and reducing operational and first costs
250 350 Market Growth during Transition
Original (Reagan Years?)
60+ years 300
200
250
Total Gone
Original
150 200
100 150
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50
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0 0
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Mechanical Hybrid Electronic Fully Electronic Mechanical Hybrid Electronic Fully Electronic
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20. Vision and Disruption
Example below: Disruption continues…
 Electronic products allowed
 Lower costs
 Features not previously possible in the original product
 New Advanced products which expanded/displaced some of the original market
 Previously Dominate players
 Scrambled to catch up in Hybrid Electronic space
 Led Fully Electronic and Advanced products
 Hybrid leader then scrambled to catch up
 Market expanded
250 450
Electronics allowed New Products New Products displaced Original Product
400
and significantly grew the market
200 350
300
150
250
200
100
150
50 100
50
0 0
1978
1979
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Mechanical Hybrid Electronic Fully Electronic Advanced Mechanical Hybrid Electronic Fully Electronic Advanced
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21. Vision and Guts – A role
A key someone must (at least for a product or product line)
 Understand:
 What they don’t know, whether it is important, and
how to find needed answers
 The customers’ businesses
 Their processes, problems and costs
 Potential current and future solutions for their needs
 How to partition these needs into potentially profitable offerings
 Work across the organization and industry - communication
 Take ownership of the offerings:
 Empowered to define the offerings
 Make tradeoffs to optimize the business from the offerings
 Champion the tradeoffs internally and externally
 These are unique and rare people
 The role often defaults to the developer – good or bad!
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22. Vision and Preparation
Company Vision feeds Core Research
 Company should have a vision of its future industry and offerings
 These Products, Systems, and Services define the technological needs
 Potential strategic suppliers
 Potential development or business partners
 Needed core research
 Must select / prioritize core research
 Assure current offerings critical to the business future are protected
 Research potential adjacencies and future core technology needs
 Consider optional technologies or technology evaluations
 Consider acquisitions
 Partner where appropriate
 Don’t expect most research to ever be used – so invest wisely
 Define intellectual property and protect appropriately
 Attempt to have core technology available ahead of market need
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23. Process and Flexibility
There is a process, it just may not be documented or very good!
 First and foremost, communicate
 Share industry knowledge – sandwich seminars, intranet, defined mentors, etc.
 Force a time to dream - informal or formal cross-business industry/concept brainstorming
 Appropriately specify and prioritize
 Welcome change, but acknowledge impact
 Never forget the concept of sunk costs , ie, don’t be hesitate to stop a poor development
 Every innovation is part of a system – architect the system
 Impact on advertising, channel partners, ordering, sourcing, manufacturing, support,
obsolescence
 Internal and external testing, configuration, control, lab & field tools, security, privacy, asset
management
 System applications
 Every successful innovation will iterate – architect for easy modifications
 Within product, software, or system design in layers with as generic interfaces as possible
 Don’t design a specific product but an integration of defined functional blocks that can be
easily replaced
 Every innovation is not the same – manage risk appropriately
 Consider all risks – time to market, impact on customer, quality, customer acceptance, future
cost, etc
 An offering for one of many customers usually has less risk than for the generic market
 Product in critical processes usually has more risk than a product for entertainment
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24. Focus and Engagement
Isolate Development, but not too much
 Development personnel need to focus on the development at hand
 Should engage with customers up-front in a development – clarify and gain customer
endorsement
 Minimize interruptions
 Are still required for highest level support issues
 Separate Engineer(s) are needed to focus on customer, sales, supply,
manufacturing, and project high level issues allowing development to focus
 Should be very capable technical decision makers (senior engineers)
 Must get their enjoyment from solving lots of problems
 May lead the qualification of the offering
 Support minor variants of existing offerings
 Are the contact for development on any high level support issues
 Development is not released until this engineer accepts the offering
 Development personnel should support initial deployment of the offering
 See first hand any issues and address quickly
 Feel the field organizations’ and customers’ pain – gain empathy
 Remain engaged with the customers and their business needs
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25. Getting it right the first time! - Plan
Appropriate actions at the right time!
Strategic Strategic Tactical Tactical Manufacturing
Business Development Business Development Planning
Planning Planning Planning Planning
Facilities / Capital / Resources
Research
Development Opportunities
Minor Product Releases
Inventory / Styling
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26. Getting it right the first time! - People
Having the right people…
in the right roles…
on the right teams!
 Developing the needed knowledge!
 Having vision!
 Communicating broadly!
 Making the hard tradeoffs and needed decisions!
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