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Three Product Development Models April 19, 2012

Posted by Tim Rodgers in Product design, Project management, strategy.
Tags: , , , , ,

Product development organizations should always consider how they can reduce the costs associated with designing, prototyping, testing and qualifying new SKUs or software releases. One easy way to do that is to re-use a part or component or subsystem that has already been qualified, assuming the finished subsystem can still meet the functional requirements of the new product with a minimum of integration effort. Obviously if the the initial design cost and tooling cost can be amortized over a larger number of products (or releases), that’s a good thing.

A strategy of leverage and re-use clearly saves money, but it can also prevent the organization from considering alternate designs that may do a better job of meeting performance requirements. The most-appropriate product development model requires a trade-off between projected features and minimizing costs over the long-term. Here are three models for consideration:

Single Product: Development of a single product, feature set, and price point; one-at-a-time to respond to the market

  • Advantages: Laser-focus, enabling design to achieve minimum cost for that feature set without being constrained by earlier choices
  • Limitations: Limited design re-use, possibly lengthening the development time; design costs, tooling and parts not amortized across a larger number of units

NB: Early-stage companies typically develop one product at a time, responding to the unique requirements of each customer, however the lack of leverage will be debilitating in the long term (see more on this topic in the book Crossing the Chasm from Geoffrey Moore).

Platform: Development of a fixed core or foundation that becomes the leveraged, common basis for follow-on derivative products

  • Advantages: Initial design and tooling investment in the platform is leveraged to subsequent derivatives or product extensions with rapid time-to-market
  • Limitations: The initial platform design limits derivative product design options, reducing flexibility and market responsiveness

Architecture: Development of a set of interchangeable modules or assets with well-defined interfaces that are designed to enable forecasted product options to meet anticipated customer needs

  • Advantages: High level of design flexibility to respond to market requirements; initial investment in architecture design enables lower product development cost, leveraged tooling and faster time-to-market; can quickly move to Platform or Single Product development models
  • Limitations: Modules are optimized for leverage and re-use, not necessarily for absolute minimum cost
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