Implications for team performance

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Implications for team performance

The importance of these factors will vary from product to product and market to market. And over time, customers or users of a product will demand more and more, e. Cost will become a more important factor in the purchase or acquisition of a product in two situations.

Implications for team performance

First, as the Implications for team performance or aesthetics of a product matures or stabilizes and the competitive playing field levels, competition is increasingly based on cost or price. In either case, a successful product developer must focus more attention on managing product cost.

The management of product cost begins with the conception of a new product. Therefore, once a product goes into production, relatively little latitude exists to reduce the cost of a product without going back and making changes to the design of the product and its manufacturing process.

Thus the strategy of rushing to put a product into production and then going back and trying to cost reduce it later, delays profitability and incurs additional non-recurring development costs.

These relationship of product cost committed is represented in the diagram below. When a company faces a profitability problem and undertakes a cost reduction program, it will typically reduce Implications for team performance and development expenditures and focus on post-development activities such as production, sales, and general and administrative expenditures.

While not suggesting that these are inappropriate steps to take, the problem is that it is too late and too little.

What we saw

The most effective cost reduction or profitability improvement program has to start early in the development cycle. The primary focus is on time-to-market, product performance, aesthetics, or technology. Companies may get by with this approach in some markets and with some products in the short term, but ultimately competition will catch up and the product will no longer be competitive.

In other companies, cost is a more important factor, but this emphasis is not acted upon until late in the development cycle. Projected costs of production are estimated based on drawings and accumulated from quotes and manufacturing estimates.

If these projected costs are too high relative to competitive conditions or customers requirements, design changes are made to varying degrees to reduce costs. This may occur before or after the product has been released to production.

The result is extended development cycles and added development cost with these design iterations. In some organizations, development costs receive relatively little attention as well.

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There may not be a rigorous planning and budgeting process for development projects. Budgets are established without buy-in from development personnel resulting in budget overruns.

Design to cost is a management strategy and supporting methodologies to achieve an affordable product by treating target cost as an independent design parameter that needs to be achieved during the development of a product. A design to cost approach consists of the following elements: Everyday customers buy products with functions, features and performance in excess of their needs and wonder how much is money is wasted on these unneeded capabilities.

A keener awareness of design to cost requirements is needed. Based on this awareness of customer affordability or design to cost requirements, cost targets should be formally established.

These targets should be developed based on pricing formulas and strategies and consideration of price elasticity. Prices and target costs will also have to consider projected production volumes and amortization of non-recurring development costs.

In a more complex product or system, the top-level target cost will need to be allocated to lower level subsystems or modules. This will establish a measurable objective for a product development team where multiple teams are involved in a development project.

In an environment where development cost is significant relative to total recurring production costs, more attention will need to be paid to managing these non-recurring development costs. Non-recurring development cost will be a function of the extent of new product and process technology and the extent of use of new materials, parts and subsystems.

If product is an evolutionary step with minimal development risk, non-recurring development costs will be lower. The use of standard parts and modules from other existing products will also lower non-recurring development costs. This suggests a strategy of not letting product and process technology application get too far ahead of customer affordability requirements.

Product development team members should buy-in to or commit to these product cost targets and development budgets to improve the chances of meeting these objectives.

When empowered product development teams actually develop these budgets and targets, a sense of commitment to these budgets or targets develops.

Implications for team performance

If the budgets or targets are established by someone outside the product development team e. While competition will generally dictate that stretch goals be established, these goals should be accepted by the team as achievable.

In the absence of other information, they will tend to evaluate a product concept primarily based on its performance merits and, at best, secondarily consider a subjective estimate of the relative costs of the design alternatives. Ad-hoc cost studies or trade studies may be prepared for significant issues, but tools to regularly support this process are lacking.Nearly all companies and organizations use teams to get work done, but can negative relationships be preventing that from happening?

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How to Fix the Negative Relationships that Affect Team Performance