Engineers are natural innovators, expected to turn out novel products for diverse marketing opportunities within the framework of a company’s business model. However, the engineering organization must reinforce this innovative spirit and get the most out of each product development team.
The deployment of these teams requires the setting and balancing of multiple priorities. For example, many engineered-product companies must prioritize opportunities and resolve conflicts between new technology investment, new product platform development, smaller incremental product rollouts, and the release of specialized or customized products based on these platforms. All of these opportunities require innovative engineering, all can be profitable, all are necessary for a well-balanced organization, and all can go on simultaneously if R&D activities are effectively managed.
Such product-line issues frequently are framed in terms of balancing opportunities in the short term (incremental product rollouts and specialized or customized options), medium term (new-product platforms), and long term (generating breakthrough technologies) against their payoffs. While short-term activities may have less than a two-year cycle time in development, the longer activities often have a cycle time of four to seven years depending on the technology and product types.
Different product opportunities and time frames may require different types of innovation or engineering mindsets. For instance, the opportunity space for innovation while working on a rapid response to a customer’s request is very different than when creating a breakthrough technology. A good deal of day-to-day engineering activity is aimed at rapid delivery of new or updated products to market and tends to be concentrated in a company’s bread-and-butter product lines.
Long or unpredictable development schedules can be very costly due to the burn rate of project expenses, lost sales because of delayed shipments, and opportunity costs associated with delayed start-up of the next project. So the financial mindset typically associated with product development activity involves shortening time to market to improve profitability.
The intensity of short-term product development activities can be so overwhelming that work on longer-term technology development often is forgotten. An organization may become mainly reactive and less proactive to the needs of the market place. Engineering can get into a rut with a limited scope of innovation, resulting in ho-hum products that may do little more than meet basic customer needs.
To avoid this, some engineering resources must be devoted solely to longer-term development activities, and the engineers that work on them should have fewer constraints on the types of innovation they investigate. The aim is to keep a steady stream of innovative products flowing that provide a high level of value-added benefits to customers and a high level of profitability to the producer.
Project Team Model
The structural model for many product-engineering organizations is a group of teams, with each team assigned to a particular product or product line. The way these engineering teams are set up can help manage risk, encourage innovation, and improve the odds for success.
Some teams work on new products and others on product-line extensions, and some are involved with upgrading and maintaining existing product lines. Team activities depend on where the product is in its life cycle.
Naturally, the financial objectives are growing sales and profitability. The engineering objectives are inventing or improving solutions to customers’ problems—well-designed, economical solutions that have a clear marketplace contribution and are difficult for the competition to imitate. Internal financial pressures dictate accomplishment of these objectives in the shortest time practicable, without undue risk, while conserving company resources. This always involves trade-offs in project scope, costs, and scheduling.
Most of these objectives and activities have a relatively short time horizon. So where does technology innovation fit into the organization and business model?
Historically, the right breakthrough technologies, effectively implemented, help an organization more easily meet all its objectives. However, the development of new technologies can take a company outside its financial and engineering comfort zones.
It involves financial commitment and risk. Although the risk taken usually is proportional to potential reward, increased uncertainty may cause a company to underinvest in long-term goals. The amount a company is willing to undertake depends on its resources, the strength of various stakeholder interests, and the ratio of risk to reward for each project.
If a company tries to invest too heavily in longer-term goals, its other goals may flounder. If the investment is too lean, products may become stale, and the competition may take market share. For an engineered-products company in today’s business environment, the ratio probably needs to be about 90:10 or 95:5 with regard to short-term/longer-term activities.
The organizational structure may be such that an engineer serves on more than one product development team. However, it’s best if the technology development team has a unique set of members, and they devote at least 90% of their time to activities involving new technologies and acquiring core competencies that could benefit the company.
Delegating short-term product development work to the technology team or loaning its members to product development teams in a role other than consultation disrupts technology R&D. Conversely, product team members should focus about 90% of their time on short- and mid-term activities but keep 10% of their time free to pursue other activities such as pet ideas and technology education. This will allow some contribution to the longer-term needs of the organization.
A major element of the technology team’s charter is idea generation centered on breakthrough technologies. Team members should be looking for convergence and synergies in new technologies and potential product platforms. From time to time, the team may generate an idea for a new product-line concept, but the scope of their research should encompass technologies not associated with any particular product line that the company currently produces.
This is risky business. A company’s executives, board of directors, and various stakeholders must be willing to invest in this type of activity where it is not clear what such a team will produce. Perhaps only one idea in 10 will result in something of commercial value. It could be a new product platform or a technology that leapfrogs existing product capabilities. Or, it could result in nothing financially viable.
Visions of the latter motivate companies to dilute technology-team R&D by giving it product-development assignments. To avoid this, keep the technology team small enough that the organization can afford not to use it for current project work. Other resources should be used to solve technical problems and keep product development projects on schedule.
Creating an Environment for Innovation
An innovative organization looks for ways to encourage creativity in everyone. By nature, engineers are creative, so a major organizational goal should be development of a culture that enhances this.
It is incumbent on company executives and organizational development specialists to work with project managers and team leaders to optimize team structures. All organizations reflect the most significant issues facing a company.
Each organization is a compromise, with a major focus on fixing the biggest problems of the day. But these problems change over time. To reduce the need to change a structure too frequently, an organizational model should be developed that considers longer-term time horizons and larger strategic issues facing the company.
Have a set of clear objectives, responsibilities, and measurements for each team. This includes the technology development team, whose efforts may otherwise lack focus.
A further requirement is periodic monitoring of team goal setting. However, the role of executive management should be leadership in establishing overall objectives, not creating a detailed map of the course taken. Leave the details to the engineering teams. These steps help avoid the perception that an engineering class system has developed with some teams or team members residing in an ivory tower. Such perceptions are damaging to morale and the work that must continue between the project and the technology teams.
After all, technology teams are part of an engineered- products business. As such, their existence is encouraged by virtue of the positive and measurable business impact they have.
Interteam cooperation can be further enhanced by clearly defining the roles of each team. For example, the technology team must take responsibility for developing new technology to the point that implementation risks are reduced to a reasonable level before turning it over to project teams.
Proceeding successfully from invention to implementation requires a thorough and practical understanding of the application. It must be clear how an untried technology can intersect the product plans with minimal risk and solve customers’ problems or improve internal processes.
In most engineering organizations, when engineers have proven their technical prowess and demonstrated leadership, they are given their first role as a project manager. For this reason, many project managers in engineering companies once were the best engineers in their fields.
Management, however, is a career change, and many engineers step up to this challenge without fully comprehending the nature of the change. They may not realize their personal value as a manager, which involves setting objectives, developing people and businesses, and then stepping aside as their team takes credit. Instead, they hold on to the idea of value through technical knowledge.
At first, this type of leadership may seem very much appreciated by a team with whom the manager has worked previously. However, as the manager loses his/her technical edge over time, others on the team are not allowed to develop into technical decision makers. This tends to quash innovation.
In product development teams, innovation can be encouraged by developing a technical leader while focusing the project manager on excellence in management principles. In fact, it often is beneficial to have a project manager lead a team of engineers skilled in an area other than the manager’s expertise.
The project manager must be technically respected by the team. He/she needs to understand how to ask questions and probe for an engineer’s grasp of the problems at hand.
A project manager must know the mechanics of managing a project’s scope, schedule, and resources. This person also should understand how to motivate team members to get the best out of them, make the team an enjoyable one with which to work, and be a visionary in terms of objectives. These things set the environment for innovation but do not establish a project’s technical direction.
Appointing a respected technical leader to work with team members in setting technical direction empowers the team to be innovative. This leader and team members should be the experts on technology and establish the technical areas that are pursued in meeting product objectives. They are the ones who must reduce the risks associated with the product’s critical performance requirements, development costs, and time to market.
There is another reason for using this team structure. Often, project managers are responsible for salary reviews and other monetary rewards to team members. If these are not part of the technical leader’s function, team members will be more independent and less hesitant to speak up on technical issues.
People select engineering careers because they want to be creative and solve technical problems; their satisfaction is derived from a sense of accomplishment when they do this. Still, most people like to be recognized for their accomplishments. While it’s difficult to plan, schedule, and measure innovation, public recognition of results encourages engineers.
Recognition can come through internal means such as personal statements from someone of authority, presentation of work at symposiums, publication in journals, and filing patents.
Recognition through a small monetary award and public thanks for all disclosures, whether a patent is filed or not, is one way to encourage greater participation in innovative thinking. Even if an innovation is not patentable, an internal patent disclosure committee still can recognize an engineer’s creativity.
Another way to acknowledge and encourage creativity is to give engineers time to write white papers and technical articles for publication. At Keithley, we also have established awards for technical achievements and show recognition through the Joseph F. Keithley Quality, Service, Innovation, and Integrity Award.
Avoid Counterproductive Environments
The flip side of the coin is avoiding things that discourage innovation. Disrespectful, destructive contention in teams will do this, especially if an authority figure becomes overly directive. Technical leaders and project managers must watch out for this and guide discussions in ways that are not threatening to team members.
Destructive contention, lack of mutual respect, or situations where people aren’t really listened to eventually lead to no contention. Then, people will not speak up, and all ideas are not brought out for consideration because there’s no positive payoff. Without constructive contention, innovation suffers.
Another enemy of innovation is a risk-averse environment. This can develop when there is too much emphasis on short-term financial results, which may be accompanied by overly lean staffing, too many projects and goals, and excessive stress on shortening product development cycles.
Finally, it is important to recognize that innovation can come in many forms. It is more than just creating new technologies. Managers need to be skilled in recognizing and rewarding innovation in all areas of business.
For example, innovation can take the form of cost-reduction technologies or quality-improvement methods. Or, it can be seen in methods to motivate, develop, and reward people.
Innovation will suffer if managers do not adequately account for opportunity costs when setting goals for the organization. Look for opportunities to free internal resources that are no longer working on core competencies and use these resources where there is the best chance of being innovative. Make these reviews a regular part of innovative efforts since yesterday’s core competencies may not be tomorrow’s.
Continually assess externally available technologies to determine those that are worthwhile to adapt. Acquire them via outright purchase, joint ventures, or strategic partnerships.
Recognize that some of the most important partnerships take place between your own marketing, engineering, and manufacturing groups. Manufacturing strategy and R&D strategy should align with each other, understanding that the primary goal of both organizations is to make money for the company. However, the sub-goals of the two organizations are, by their very nature, different and yet compatible.
A design should be manufacturable with existing processes if possible or have a business case so compelling that it warrants investment in new manufacturing methods and equipment. Engineering must earn manufacturing’s trust that production avenues currently available have been explored before seeking development of new processes.
It’s a Jungle Out There
Many of your global competitors take a long-term view of market opportunities. Some can afford to devote large amounts of money and manpower to engineering and production. And yet, some techniques do not cost a great deal of money. Some may be nothing more than cultural and mindset changes to get the most from your people.
Look at your organization critically. Ask what you can afford. Don’t starve innovation with an overly short-sighted view. On the other hand, if you are overly ambitious, you may not hold the course, and little innovation will make it into your products. Strike a careful balance.
About the Author
Larry Pendergrass is vice president of new product development at Keithley Instruments. He has spent more than 20 years in engineering and management for various engineering companies such as Hewlett-Packard and Agilent Technologies. He received an M.S. in physics from U.C. Davis. Keithley Instruments, 28775 Aurora Rd., Cleveland, OH 44139, 440-248-0400, e-mail: [email protected]
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February 2004