Page 331 - Operations Strategy

306 CHAPTER 8 • PRoduCT And sERviCE dEvEloPmEnT And oRgAnisATion
the Japanese car giant. It has a strong, functionally based organisation to develop its
products. It adopts highly formalised development procedures to communicate between
functions, and places strict limits on the use of cross-functional teams. But what is really
different is its approach to devising an organisational structure for product development
that is appropriate for the company. The argument which most companies have adopted
to justify cross-functional project teams goes something like this:
‘Problems with communication between traditional functions have been the main reasons
for, in the past, failing to deliver new product and service ideas to specification, on time and
to budget. Therefore let us break down the walls between the functions and organise resources
around the individual development projects. This will ensure good communication and a
market-oriented culture.’
Toyota and similar companies, on the other hand, have taken a different approach.
Their argument goes something like this:
‘The problem with cross-functional teams is that they can dissipate the carefully nurtured
knowledge that exists within specialist functions. The real problem is how to retain this
knowledge on which our future product development depends, while overcoming some of the
traditional functional barriers that have inhibited communication between the functions. The
solution is not to destroy the function but to devise the organisational mechanisms to ensure
close control and integrative leadership that will make the functional organisation work.’

summARy AnsWERs To KEy quEsTions

Why is the way in which companies develop their products and services so important?
Competitive markets and demanding customers require updated and ‘refreshed’ prod-
ucts and services. Even small changes to products and services can have an impact on
competitiveness. Markets are also becoming more fragmented, requiring product and
service variants developed specifically for their needs. At the same time, technologies
are offering increased opportunities for their exploitation within new products and
services. Nor can one always separate the development of products and services on
the one hand from the development of the processes that produce them on the other.
Thus, product and service development influences and is influenced by almost all other
decisions and activities within the operations function.

What process do companies use to develop products and services?
There is no single product and service development process, as such. However, there are
many stage models that attempt to define and describe the various stages that a process
should include. Typical of these stages are such activities as concept generation, con-
cept screening, preliminary design, design evaluation and improvement, prototyping
and final design and developing the operations process. It is important to remember,
though, that although these stages are often included (either formally or informally)
within an organisation’s product or service development process, they do not always
follow each other sequentially. In reality, the process may recycle through stages and
even miss some out altogether. A common metaphor to illustrate the process is that of
the ‘funnel of development’. Again, though, the idea of many ideas passing through
a funnel, being periodically screened and a single product or service design emerging
from the end, is itself a simplification.

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