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strategy and business
 / Spring 2008 / Issue 50(originally published by Booz & Company)


Launch and Learn

The use of an advanced technology demonstrator may appear to slow down the innovation process, yet experience has shown us the opposite is true. The research group can take a less-mature idea and refine it in the supportive environment of the laboratory without the timing pressures imposed on a specific product development project. The ATD forces the group to make the concept real and also becomes a vehicle to show the organization the possibilities of the concept. Showing is far more powerful than telling.

Of course, technology demonstrators are not enough to produce improved returns. New technology capabilities create value only when they come to the marketplace as products or features. Senior management must ensure that ATDs explicitly link the research function, the product creation teams, and the product in the market through technology road maps. Just as the road map connects the technology project to the product portfolio through the product creation projects, it also establishes, in advance, a contingency plan if the invention effort takes longer than expected.

Although research efforts have longer time horizons and tend to be less predictable than product creation projects, ATDs should include some level of schedule discipline. Producing ATDs on a fixed schedule requires accepting that the actual content of a specific ATD might not incorporate all of the advanced technology originally envisioned. A subsequent demonstrator, also developed on a disciplined schedule, would then host the delayed technology capability. Some capabilities still under development can be realigned for future ATDs. The clear linkages — with flexible timing — between technology objectives and the research program, coupled with the use of regular ATDs to validate concepts, instills a realistic level of discipline in the unpredictable world of invention.

Modular Innovation
A company’s product or service architecture makes up the building blocks for managing the product portfolio. By leveraging common building blocks and systematically mixing, matching, and upgrading others, a company can offer a wide array of competitive products or services without designing every one from scratch. The primary building blocks are platforms, modules, and differentiators.

Platforms provide the basis for a number of models that serve different market segments but share certain underlying features. Modules help reduce part counts and manage complexity. Differentiators result from a clear understanding of what matters to the customer and what can or should remain invisible. Thoughtful management of product architecture using platforms, modules, and differentiators can deliver efficiencies in product creation, purchasing, manufacturing, and service while offering superior customer benefits.

Platforms. Alfred P. Sloan, who led the General Motors Corporation from 1923 to 1946, played a seminal role in building the foundation for modern product management through platforms. In the company’s 1924 annual report, Sloan articulated his vision of providing “a car for every purse and purpose.” At that time, the company offered 10 cars under each of seven different nameplates: Chevrolet, Oakland, Olds, Scripps-Booth, Sheridan, Buick, and Cadillac. Without clear market positions, each car and brand competed with the others, and except for Cadillac and Buick, all of the brands were losing money. Sloan’s clear vision allowed the company’s divisions to stake out their own market positions and show the entrepreneurial spirit necessary in a dynamic environment while ensuring a common direction overall.

Today GM manages a far more complex product line by employing a dozen platform variants. For example, the Chevrolet Malibu, the Pontiac G6, the Saab 9-3, and the Opel Vectra all share the same midsized, front-wheel-drive platform. Similarly, a single rear-wheel-drive platform supports the Buick Rainier, Chevrolet Trailblazer, GMC Envoy, and Saab 9-7X. Although these models build on a common chassis and suspension design, each offers a feature bundle and price point consistent with the supporting nameplates. The different combinations of platforms among the variety of GM nameplates provide a unique lineup for each brand despite a high degree of commonality across all product lines.

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