In my advisory work with enterprise clients navigating major new-product introductions, I keep running into the same frustration: how best to measure progress. This is frustrating because clients readily agree with me that the only useful measures of progress are how much longer and what is left to do.
Yet a moment’s reflection reveals an uncomfortable truth: There really is no way to know; there are no viable metrics. No executive wants to hear this, of course, so managers tasked with developing competitive new products are under constant pressure. And sooner or later they all turn to the same measure of progress: costs incurred.
Why is this so frustrating? Because money invested, or sunk cost, is a poor measure of engineering progress. How so?
Dollars aren’t design inputs
At CIMdata, I continually struggle to keep clients focused on the “Big Three” inputs of new-product development: Materials, Information, and Energy.
Money is not mentioned anywhere, not even in Information, yet it is needed to acquire material, information, and energy. The only way to minimize the use of money—the cost of a product—is to first optimize the use of material, information, and energy for the entire lifecycle. Tracking project spend only measures financial effort, it reveals nothing about the quality of the results or whether the product will succeed in the market.
I am often frustrated by clients’ unwillingness to see this, to let go temporarily of their focus on transactions and to keep confusing the costs of product input with the substance of what goes into new products. In short, measurement is not substance, which means that these clients are misleading themselves. They should focus on what their engineers are achieving, the optimization of the resulting product design, and its use of materials and energy. This is more important than tracking costs during development. This is because a product’s lifecycle cost (i.e., the cost to produce and service it) is usually significantly larger than the cost of designing it.
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