Making R&D lean: the logic of lean manufacturing has many possible applications in R&D--provided one respects R&D's unique nature.

Large complex semiconductors are best optimized using feedback obtained from test wafers. However, running a single test wafer through a $1 billion semiconductor fabrication facility is expensive. In traditional chip development, such test wafers were done on demand using a "push" system. Chip

designers would wait until they had enough issues to make it worthwhile to incur the cost of a test wafer. Then, test wafers would be scheduled, run and tested. It could take a month or more to receive results. Because it was expensive to react to such infrequent and delayed feedback, developers adopted conservative design approaches to avoid painful surprises.

Today, companies like Taiwan Semiconductor use a radically different system, which resembles the "pull" systems used in lean manufacturing. Generic test wafers are scheduled to be run at fixed intervals. Multiple projects share the space on these wafers, and share their cost. Any project can get high-risk concepts into silicon quickly and get feedback in a matter of days. The shared test wafer is frequent and highly predictable; it acts as a window of capacity that "pulls" technical issues from the project teams into the manufacturing process. Since each project now bears only a portion of the fixed cost, it can use more test wafers, more frequently, and more cheaply than when it waited to request its own private wafer. With quicker answers, less effort is spent going down fruitless paths. This reduced downside enables more aggressive risk-taking. Rework costs drop; efficiency, quality and innovation rise. The use of "pull" causes simultaneous improvements in speed, cost and quality.

In this way, whether we recognize it or not, the compelling logic of lean principles is infiltrating R&D (see "The Logic of Lean," next page). These principles make enormous sense when they are applied properly, but they must be applied in a very different way in R&D than in the manufacturing domain where they originated. This article will discuss why lean principles are relevant to R&D and how these ideas can be applied safely.

Lean R&D is Not Lean Manufacturing

Although there are similarities between manufacturing and R&D, the differences are substantial. Manufacturing is a repetitive, sequential, bounded activity that produces physical objects. In manufacturing, risk-taking is not a major mechanism for adding value. A manufacturing process can do exactly the same thing a million times and still add value every time.