Next Generation Product Development: How to Increase Productivity, Cut Costs, and Reduce Cycle...

Next Generation Product Development: How to Increase Productivity, Cut Costs, and Reduce Cycle Times; Michael E. McCrath; McGmw-Hill, New York, NY; 2004; 379pp., $39.95.

The thesis of this latest book by the co-founder of management consultancy PRTM is that the Time-to-Market Generation of product

development management has matured and we are now entering the R&D Productivity Generation. In this generation, explains Michael McGrath, focus will be on "delivering more new products than your competitors and doing it with a lower investment." As a result, new competitive strategies will be launched and R&D effectiveness will double, he predicts.

"Companies that successfully make the transition from the Time-to-Market Generation of the 1980s and 1990s to the R&D Productivity Generation," says McGrath, "can reap twice as much new product profit from the same R&D investment, or the same new product profit with half the investment, or some combination of the two."

In the new generation of product development that McGrath foresees, the management process will be transformed into an efficient, highly automated, and integrated, enterprise-wide process. In addition to transforming R&D management, the next generation will introduce financial management of R&D. "Through new practices and systems, many companies will achieve financial control and financial integration of R&D for the first time," he says. "In many cases, this will enable CFOs to provide more financial leadership of R&D."

The new generation of productivity-based gains is made possible by recent advances in information systems, which McGrath calls Development Chain Management (DCM) systems. These are integrated systems that automate key aspects of product development management, including process, knowledge and data management.

McGrath has organized his book around the three primary areas of improvement that define R&D Productivity Generation processes: resource management, project management, and portfolio management.

Resource management is management of a company's investment in development resources-primarily its people-in order to maximize product development to achieve strategic goals. When resource management is automated and made more efficient, projects will be completed with fewer developers assigned, and there will be an overall increase in developer productivity. McGrath also identifies R&D utilization, or the percentage of R&D resources assigned to approved revenue-producing projects, as a key component of next-generation product development.

Project management is redefined in Next Generation Product Development as a process, not just a technique; a project's success is, therefore, not limited to individual project managers' personal and technical skills, McGrath writes. He refers to the new process as enterprise project management and explains that it is based on collaboration and a common plan that serves to direct all steps in the project. This in turn provides a foundation for more advanced project management practices such as distributed program management, collaborative development, and context-based knowledge management.

Portfolio management encompasses a company's selection and prioritization of projects in order to achieve its business goals, including maximizing the long-term value of new product investments. The use of DCM systems enables comprehensive, "on demand" portfolio and pipeline analysis based on actual project information. Product strategy information can also be integrated with product development information, providing a powerful strategic engine.

Each of these areas comprises a section of the book, and each section offers practical steps companies can take to achieve the results McGrath anticipates. However, he notes that this next generation of product development management "is many times more complex than its predecessor." And for that reason, he warns readers they will find his book difficult, although "the good thing about this complexity is that those who master it early will achieve competitive advantages that will not be easy to copy."