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Toyota, 3M, Microsoft and ThoughtWorks have all nailed new product development. Here's how.

By Alexandra Weber Morales

Delaying decisions, communicating less frequently and building a large number of prototypes seems like a recipe for disaster, but the Japanese automaker Toyota, following the teachings of efficiency pioneer Taiichi Ohno, has used these principles and others to build new, safe and fuel-efficient cars to market in 15 months—at half the time and cost of U.S. factories. According to Mary Poppendieck, a project management consultant who worked for many years at 3M, the tenets of new product development at Toyota and 3M are perfectly applicable to software. Poppendieck, a widely published author and proponent of "Lean Programming," led a half-day tutorial on Monday, April 22 at the Software Development 2002 conference in San Jose.

Sticky Ideas
At 3M, famous for the invention of the Post-It note, 30 percent of sales are for patented products that are less than five years old, and a hands-off management style and a creative culture allows inventions to emerge rather than be planned for. Visionary 3M leader William McKnight's philosophy was to accept that mistakes would be made. (Tellingly, "one mistake and you're fired" was the rule at the now bankrupt Enron.) Scientists at 3M are given free reign and urged to follow the "15 percent rule" by spending that portion of their time on the projects that most interest them. Peer recognition and self-determination round out the human factors that contribute to 3M's success at launching new products without the infighting among new and existing business lines that occurs in many companies.

"Building a large number—an 'excessive' number—of prototypes is very counterintuitive for us," said Poppendieck, referring to the Toyota process, but "it allows you to deal with a larger set of options. Martin Fowler, [chief scientist at ThoughtWorks, a noted software consultancy] has a paper in IEEE Software about keeping several options open within the team. You don't publish them out so that you can decide at the end. At Toyota, the schedule isn't task-based; they meet hard prototype milestones."

Want Not, Waste Not
Take auto-stamping dies, for example. Toyota has a different kind of relationship with suppliers, Poppendieck explained. They believe that designing fast will reduce more waste, so they can make changes to a die within two to three hours—compared to two to three weeks for an American company. "In a U.S. company, there's a fixed-price contract with the supplier. That's why you have to have your fancy change process. And the contract process adds an awful lot of waste and delay."

A key to avoiding chaos at such a fast pace is set-based design, which hinges on parallelism (simultaneous design of parts and tools), prototype integration (compare a range of real models rather than computer models) and convergence (combine the best solutions within the problem constraints and gradually reduce uncertainty). Contrast this to the more common point-based approach, which dictates an initial design period followed by analysis and modifications.

Microsoft and ThoughtWorks are two software companies that follow similar methods. The former focuses on shipping a new product every three months, with multiple small teams working in parallel. Despite the high autonomy of these six- to 16-person teams, they use a common language, meet stiff deadlines and must never break the daily builds. At ThoughtWorks, similar standards apply. There, many small teams work on modules within "threads," or part of a given product line such as an insurance policy type.

Social Engineering
But interpersonal interaction plays a large part in these firms' success. "Every company says 'We value our employees.' The question is, 'Yes, but do you really?'" said Poppendieck. Beyond meeting basic human needs of survival (job security), belonging (being on a team), power (goals over tasks), freedom (self-determination) and fun, successful companies "focus on the people actually doing the work." Not only do they direct resources to these engineers, they also train and mentor them. Both 3M and Toyota share clear business objectives, fact-based decisions, functional support and worker-defined processes.

"I think something that's missing in the focus on agile methods right now is the importance of leadership," Poppendieck said. "Not all managers are leaders, but most leaders are managers, and good teams crave leadership. Even leaders need good leaders." Technical expertise is crucial for chief engineers and functional managers at 3M and Toyota, who set direction, help people cope with change, motivate and mentor. "They hold the best job in the company," Poppendieck said, and are well rewarded for it.

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