3. New Product Development
in a Small Cap Technology
Company
Indra Purkayastha
Sr. VP, New Product Development
iRobot Corporation
October 19, 2006
4. At Home
The Old Way
A Better Way
More than 2M
iRobot Roomba Vacuuming
robots sold
“I am unable to vacuum
without extreme pain
and wanted one or two
robots to help keep me
independent.”
“Picks up more dirt than
humanly possible.”
5. At Home
The Old Way
A Better Way
More than 2M
iRobot Roomba Vacuuming
robots sold
“I am unable to vacuum
without extreme pain
and wanted one or two
robots to help keep me
independent.”
“Picks up more dirt than
humanly possible.”
6. In the Frontline
The Old Way
A Better Way
More than 700
iRobot PackBot robots in
theater
“You have saved
lives today!”
“When a robot dies
you don’t have to write
a letter to its mother.”
7. In the Frontline
The Old Way
A Better Way
More than 700
iRobot PackBot robots in
theater
“You have saved
lives today!”
“When a robot dies
you don’t have to write
a letter to its mother.”
20. Consumer Division
Goal: Increase Penetration in the Home
Home
Maintenance
Home Cleaning
Increasing Challenge and Value
People Care
21. Challenges Facing Home Robots … early ‘05
• Dedicated passionate people who love robots
• Lack of process
• Long Tooling Cycle
• Supply Chain delay – order to fulfillment ~6 months
• Long gap between concept and reality
• Making a repeatable producible product quite difficult
• Inability to take large bets
Two principle drawbacks
1) Long Unpredictable Product Development Cycle
2) Uncertain process for picking projects
22. Vicious Circle
Pitfalls of a long product development cycle
u
v
w
x
Start
Start + 3mos
Start + 8mos
Start + 13 mos
Project
Start
Competitor
makes
announcement
Key Enabling
Technology
proves difficult
Product
does not test
well with
focus group
Scope, Budget
Schedule agreed
24 mo. to launch
Scope Revised
New Budget
Team commits to
No schedule impact
Scope Reduced
New Budget
4 mo. Impact
Scope Changed
New Budget
4 mo. Impact
Project
Scope
changed
Project
Scope
decreased
Project
Scope
Changed
y
•8 months late
•Miss original intent
•Budget Over-run
•Under perform
in marketplace
24 months development cycle … vulnerable to market whims
23. How to Achieve Predictable Development Schedules
•
Bring cycles down to 12-18 months
No invention/research in product development
Do not change scope
• Avoids “everything and the kitchen-sink” in requirements phenomenon
Resource people to do one project only … avoid multi-tasking
•
Get to yearly release/update discipline
•
Move research/advanced development off-line ... Not tied to releases
Keyed off a Product Road Map
•
Integrate Manufacturing Early into Product Development Cycle
Leverage Vendors and their competencies
• Change the culture … Product Development is a total business sport
Includes Marketing, Engineering, Manufacturing, Post Sales, Finance …
24. Product Life Cycle
Product
Development
Advanced
Development
Manufacturing
Integration
Design
1
3
2
• Product/Market Concept OK
Sustaining
• Recipe OK for tooling
• Small team of Engineers & Mktg
engaged to flush details
4
• Manufacturing readiness
• Pilot complete
• Product Launch
• Major Risks Retired
• Market/Customer/Channel Identified
• Detailed Product Spec written
• Financials justify continuation
Project may be stopped at any toll-gate if it can not be justified
5
26. The Three Pillars of the Organization
• Advanced Development
Working on products/technologies that are 2 years away
• Product Development
401 K
Pays tomorrow’s bills
Working on products that are to be launched next year
Each Team is responsible for
• Project cost
• Product Cost
• Schedule
• Quality
• Product Scope
• Sustaining Group
Pays today’s bills
Continuous focus on product cost … celebrate a $0.10 savings
Minor Product Enhancement
27. Advanced Development
• Small integrated team with marketing and engineering
• Many small ideas
• Quick feasibility / technology assessment
• Kill the ones that do not stick early
• Build semi working prototypes and show it to customers
Assess feasibility
Do not be fooled by the “early adopter”
Learn to listen to early majority
Do not fall on the trap “ Build it and they will come”
Get alarmed if this group is not killing an idea a month
and generating two new ones while doing so
28. Quick Justification Analysis
Two Years of Sales
4
Contribution Margin (CM) =
Payback Ratio =
Our Pocket Price - Our Cost
Total CM in the first 24 months after launch
Total Program Expense
> 2 : Good Program
29. Product Development
• Scope Freeze
• Bounded by hard dates … Christmas can not be postponed
• Prototype early and often
• Extensive use of Stereo Lithography
• Classical Project Management Techniques
Critical path
Risk management
• One focus
• Strong manufacturing integration … get the factory integrated early
Point clearly … Resource appropriately …and get the hell out of the way
31. Sustaining Engineering
• Small tweaks – concept to launch < 6 months
• Significant cost out focus … Without compromising quality
• Very well integrated with manufacturing
• Seamless with customer service
32. October ’06 Status
Positives
• Predictable Execution on Product Development
• Nimble response in Sustaining for new products
• Significant Variable Cost Productivity achievements
• Manufacturing closely integrated with Product Development
• Key next generation project moving through Advanced Development
Improvement Opportunity
• Ideation process for Advanced Development
• Reducing the tooling cycle
• Staffing the Advanced Dev activity appropriately
Improving, but long way to go
