V. Krishnan

Appropriateness and Impact of Platform-Based Product Development

In their quest to manage the complexity of offering greater product variety, firms in many industries are considering platform-based product development. Product platforms, which are component and subsystem assets shared across a product-family, enable a firm to better leverage investments in product design and development. While the platform approach offers a number of benefits, it also imposes certain additional costs that have not received adequate research attention. In this paper, we use an industrial example both to illustrate some of the costs and benefits of platform-based product development and to motivate the development of a mathematical model. The model is formulated to better understand the appropriateness of product platforms and their impact on product-planning decisions. Our results indicate that platforms are not appropriate for extreme levels of market diversity or high levels of nonplatform scale economies. Also, a firms product positioning and introduction sequence decisions made during the product-planning phase are significantly impacted by the presence of platforms. Specifically, a platform increases the separation among products and offers a multitude of product introduction strategies. We translate our model findings into a managerial framework.

Technology Selection and Commitment in New Product Development: The Role of Uncertainty and Design Flexibility

Selecting the right technologies to incorporate in new products is a particularly challenging aspect of new product definition and development. While newer advanced technologies may offer improved performance, they also make the product development process more risky and challenging. In this paper, we focus on the problem of technology selection and commitment under uncertainty, a major challenge to firms in turbulent environments. We argue that the pizza-bin approach of rejecting prospective technologies outright may not serve firms well when the pressure to differentiate products is enormous. After motivating the challenges and decisions facing firms using a real-life application from Dell Computer Corporation, we formulate a mathematical model of a firm that must define its products in the presence of technology uncertainty. Specifically, the firm faces two options: (i) aproven technology that is known to be viable and (ii) aprospective technology that offers superior price to performance results but whose viability is not a fully certain outcome. To minimize the impact of technology uncertainty, we consider two approaches to design flexibility, termedparallel path andsufficient design, which allow the firm to concurrently develop its products while the technology is being validated. Our analysis helps understand appropriateness of the different flexible design approaches. We illustrate our model with the Dell portable computer example and note the managerial implications of our analysis.

Designing a Family of Development-Intensive Products

Faced with fragmented markets, saturated and demanding customers, and global competition, firms increasingly must design and offer a line of innovative, quality-differentiated products to target customers with differing willingness to pay (WTP). In this context, designing a special class of products that we term development-intensive products (DIPs)for which the fixed costs of development far outweigh the unit-variable costspresents some unique managerial challenges. Examples of such development-intensive offerings abound in a number of industries, including the pharmaceutical, information, and entertainment sectors of the economy. Our contributions in this paper are threefold: (a) to show that managerial insights from the traditional approach to product-line design developed for unit-variable cost-intensive products do not carry over to DIPs, (b) to present new mechanisms and managerial guidelines for designing a family of products for which development costs cannot be ignored, and (c) to illustrate the insights with an extended industry example. We find that the design approach based on degrading (or subtracting value from) a high-end product to obtain a subsumed low-end edition, shown in the literature to be an effective approach for designing unit cost-intensive products, can be inappropriate for DIPs. This limitation of value subtraction has implications for the number of variants and the sequence in which they are developed. As an alternative to a subsumed product-design strategy, we propose and examine the overlapped product-design approach, in which a low-end product is not completely subsumed within its high-end counterpart, but differentiated on additional vertical quality dimensions. Our results both explain the recent challenges of firms with subsumed low-end products and guide them in designing a product line to successfully address emerging low-end market segments.

Product family-based assembly sequence design methodology

Efforts taken by manufacturing companies to meet the increasing demand for product variety often lead to a proliferation of subassemblies. In this paper, we show that careful design of the product assembly sequence helps to create generic subassemblies that reduce subassembly proliferation and the cost of offering product variety. This approach of designing the assembly sequence to maximize the benefit from commonality of components and assembly operations, referred to as product family-based assembly sequence design, is the focus of this paper. After introducing the approach with a simple example, we formalize the notion of generic subassemblies, and present an algorithmic approach to identify generic subassemblies. We illustrate the algorithm with an example from the literature of an assembly from industry, and provide computational test results of the complexity and benefits of product family-based assembly sequence design.

Accelerating Product Development by the Exchange of Preliminary Product Design Information

In this paper, we discuss the problem of reducing product development lead time by overlapping coupled development activities through the exchange of preliminary design information. We present an approach, called iterative overlapping in which downstream development activities begin with unfinalized upstream design information and accommodate design changes in subsequent iterations. In the absence of careful control, iterative overlapping could involve excessive downstream rework leading to an increase in lead time. We formulate the iterative overlapping problem and model iterations and design changes to determine how to overlap the activities for lead time reduction. The model is illustrated with application to an automobile door panel development process.

A Model-Based Approach for Planning and Developing a Family of Technology-Based Products

In this paper, we address the product-family design problem of a firm in a market in which customers choose products based on some measure of product performance. By developing products as a family, the firm can reduce the cost of developing individual product variants due to the reuse of a common product platform. Such a platform, designed in an aggregate-planning phase that precedes the development of individual product variants, is itself expensive to develop. Hence, its costs must be weighted against the benefits of its reuse in a family. We offer a model for capturing costs of product development when the family consists of variants based on a common platform. It is shown that the model can be converted into a network-optimization problem, and the optimal product-family can be identified under fairly general conditions by determining the shortest path of its network formulation. We also analytically examine the effect of alternative product designs on product-family composition, and discuss the implications of investing in new-product technology. Finally, we illustrate our model and managerial insights with an application from the electronics industry.

Research Note---Business Value of Information Technology: Testing the Interaction Effect of IT and R&D on Tobin's Q

The business case for investing in information technology IT has received increasing scrutiny in recent years. We propose that IT investments create additional business value through interactions with other business processes. In this paper, we formalize the interaction effect of IT by focusing on one core function, namely, research and development R&D. We hypothesize that investments in IT can interact with and complement a firms R&D investments, enhancing the firms shareholder value creation potential. We test this by hypothesis by estimating the interaction impact of IT and R&D investments on Tobins q, a forward-looking measure of firm performance using a recent multiyear, firm-level, archival data set. Our results suggest that the interaction effect of R&D and IT on Tobins q is positive and significant after controlling for other firm-and industry-specific effects. Our findings provide rigorous empirical support for recent anecdotal evidence in the managerial literature with respect to the manner in which IT is enabling R&D-intensive innovation processes. Our analysis underscores the need for coordinated investments in IT and R&D, and permeating IT capabilities throughout other business processes such as R&D.

Simplifying Iterations in Cross-Functional Design Decision Making

In this paper, we consider the cross-functional design decision making process and discuss how sequential decision making leads to a degradation in design quality even when downstream design tasks are not rendered infeasible by preceding upstream decisions. We focus on the problem of simplifying the design iterations required to address this quality loss. Two properties, called sequence invariance and task invariance, are introduced to help reduce the complexity of subsequent design iterations. We also discuss how these properties may be used by designers in situations where mathematical descriptions of the design performance characteristics are unavailable. We illustrate the utility of these properties by showing their applicability to the design of catalytic converter diagnostic systems at a major U.S. automotive firm.

Operationalizing technology improvements in product development decision-making

Abstract Achieving competitive advantage and price premiums in many technology-based markets requires the incorporation of current technology in new products. To do so, firms in hyper-competitive environments increasingly plan and design their products concurrent with the independent development and validation of underlying technologies. Simultaneous validation of a core technology has important implications for a company’s product positioning and launch sequence decisions making these traditional marketing decisions relevant to operations managers. Prior research has shown that to minimize cannibalization in the absence of such improvements in technology, a firm should not launch low-end products before high-end products. However, concurrent evolution of technology can make it desirable and even necessary to introduce low-end products before high-end products. This is because in technology-based industries, improvements in technology delay the introduction of a high-end product, and a firm must trade-off the benefit of launching the low-end product earlier (greater discounted profits) against the cost of cannibalization of high-end product sales. High-end product cannibalization can be further reduced by offering the customer an option to upgrade from the low-end to high-end product, with important implications for the firm’s product positioning and introduction sequence decisions. Based on our study in the high technology industry, we model the product positioning and introduction sequence decisions under the simultaneous evolution of technology. Our analysis indicates that it may be optimal in a variety of circumstances for a firm to launch products in an increasing order of performance, even in the absence of network externalities. Besides presenting analytical results for product positioning and profit from different introduction sequences, the paper also makes a contribution to managerial practice by providing insights in the form of a conceptual framework.

Modeling ordered decision making in product development

This paper models the process of ordered product design decision making and shows that the order in which product development decisions are made has a significant effect on the product designed. The problem is formulated by introducing the notion of Quality Loss to quantify the loss of design freedom incurred by the decision makers in the later stages of a cross-functional decision process. In this context, the optimal order is the decision order with the lowest quality loss, whose characterization is one of the contributions of this paper. Design variables are partitioned into exclusive groups based on their connectivities, and the design sensitivities and connectivities are combined to develop two properties called order invariance and task invariance. Sufficient conditions, relating exclusive group structure to these invariance properties, are presented to help enhance our understanding of the optimal order. When all decision variables are order invariant, the optimal order identification problem is shown to map to the well known shortest path problem. The invariance properties derived in the paper can also be used to simplify subsequent design iterations, as shown with a simple industrial product design example.