18 May 2020
More Agility in Product Development
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How medium-sized companies quicken their pace and are more solution-oriented
German medium-sized companies are often known to have development teams resistant to change but are attached to technology. Stephan Lietz, Interim CTO with broad experience in the SME sector, Sascha Hackstein, Managing Director of Berndtson Interim, and Markus Trost, Partner at Odgers Berndtson, show how product development is becoming more agile and faster, and why opportunities are arising.
Markus: The shutdown hit the SME sector hard, but an opportunity arises in every crisis. What opportunities should medium-sized companies take advantage of now?
Sascha: The international supply chains have crashed in many areas and restructuring is required. Companies must quickly find new and reliable partners who are able to deliver. They expect agility in cooperation, including the joint development of new products and services.
Small and medium-sized companies who benefit from their experience during the crisis, can offer the necessary creativity and flexibility to succeed and establish new ways of thinking.
Markus: In your opinion, what do companies need to do in order to successfully resume product development after the COVID 19 crisis?
Stephan: Social distancing, internal corona regulations, reduced working hours and the limited availability of external partners make product development an even greater challenge. Especially since higher competitive pressure is to be expected in the recovering markets once the crisis has subsided. The importance of using the available resources as efficiently as possible is greater than ever.
In my projects, we often link the idea and concept phases of product development very closely in order to provide real customer needs. An iterative approach for a defined period of time in small interdisciplinary teams that focus on specific products is most effective. Even medium-sized companies can thus quickly arrive at a viable product with the help of functional prototypes. The resulting prototypes can be used to test the product features for which customer experience is given. As experienced in my projects, these areas often have room for improvement. The interaction between product management, marketing and development teams is especially important.
Marketing and product management cover the market side and it is crucial that the teams interact in a constructive, yet mutually challenging dialog.
Markus: What conditions do you generally encounter in medium-sized companies?
Stephan: I often find a motivated team with well-qualified candidates. A frequent problem in the collaboration is due to insufficient decision-making authority for development teams, as well as communication issues at the middle management level. For example, there are alignment problems and different goals that are not transparent.
Sascha: What does alignment mean in this context?
Stephan: Above all, the communication of important information and boundary conditions must be delivered clearly and consistently. This applies to the upwards and downwards communication of the middle management.
Clarification of who makes necessary decisions and why is key, as well as who is responsible for these decisions and their implementation. Here I often experience problem areas. For example no clear distinction is made between an information meeting and a decision meeting. This lack of clarity often leads to unfocused discussions and ultimately to a waste of time.
Markus: What conditions do companies need to create in order to emerge from the crisis with maximum support from the development department and the CTO?
Sascha: The requirements for CTOs or heads of development have been enhanced considerably in medium-sized companies. Today a candidate must be able to create appropriate services for the products. He must be able to think in terms of ecosystems and develop a complete solution while teaming with other partners. He must also develop new business models, such as data-driven services. On top of a technological competence he must have experience in strategic and economic developments. Companies should ensure that their employees possess these competencies and experiences.
Stephan: This is correct, and furthermore the strategic framework conditions in the development team must also be proven. On the one hand, current products must be created using a well thought-out platform strategy, so that product variants can be fabricated easier. On the other hand, the growing importance of software in development is often recognized, but there is room for improvement in many companies when it comes to dovetailing hardware and software.
Markus: So how can the development department fuel the growth of the company as quickly as possible?
Stephan: Above all, it is important to keep an eye on the needs of the customers and the corresponding market segments.
It is very likely that the size and requirements of various market segments will lead to a behavior change after the Corona crisis.
What we have not yet talked about, and what seems to me to be equally important, is minimizing corresponding risks in development. For once, I am not referring to the issue of business or development continuity, but to risks that are related to the product development process itself.
Right at the start of a product development process, a risk assessment should be carried out that not only checks the purely technical aspects of the development, but also considers the boundary conditions. For example, when putting together a new team or linking the development project to the initial start of new production sites, certain risks arise, which must at least be planned as a buffer and continuously monitored. Ultimately, anything that is new and different from the last launch carries a risk. If the sum of the general and technical risks is too great, the project can only fail. In this case, it is advisable to carry out pre-projects in order to minimize the upstream risk.