1. © 2003 SheepShank LLC
Project Management in the Fuzzy Front-End
of
New Technology Product Development
Project managers historically have difficulty participating during the innovation phase or Fuzzy
Front-End of new products. Incomplete requirements, non-secured budgets, and unrealistic
timelines are normal challenges the Project Manager must face once new product development
begins. By becoming involved before the project starts, many of these issues can be minimized.
In order to become engaged, the Project Manager must seek to understand the dynamics of the
Fuzzy Front-End and then insert their value to the normal dominant functions of business and
technology.
What is the Fuzzy-Front-End?
Any new technology product lifecycle has many stages and tasks that vary greatly depending on
the type of product and the corporation developing and marketing the product. Most of these
different lifecycles however, share three distinct phases controlled by four major milestones as
shown in Figure 1.
Figure 1 - Major Phases and Milestones of a New Product Life Cycle
The first phase is defined from the time an idea is first conceived or need is determined until a
decision is made to develop the product. This phase is referred to as the Fuzzy Front-End (FFE)
and is the focus of this paper. The second phase or New Product Development portion of the
lifecycle is the time after a decision is made (when the project starts) until the product is launched
into the market. The final phase is Revenue Generation or is sometimes called the
commercialization phase. Revenue Generation is the time after new Product Introduction until
the end of the lifecycle when a product is Manufacturing Discontinued.
The end of the Fuzzy Front-End (FFE) phase is the Program Commitment milestone and is the
determining factor in deciding to launch a product. Program Commitment decisions can either be
made as a controlled or uncontrolled set of events. Examples of uncontrolled scenarios are when
customer promises (i.e. commitments) are made without corporate approval or when an R&D
skunkworks project is started also without official corporate authorization or budget. However, in
the controlled decision two criteria are normally used. The first is Return-On-Investment (ROI)
and the second is risk associated with this investment. ROI can be simplified to the investment
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during Product Development versus the return produced during Revenue Generation. Risk can
then be defined as the projected versus actual time and cost accrued in Product Development, as
well as the projected versus actual gross profit during Revenue Generation. In Figure 2, the
fuzzy curve (as presented by Jongbae Kim and David Wilemon in their research paper titled
“Accelerating the Front End Phase in New Product Development) is key to understanding the
journey to Program Commitment. Once an idea is conceived, analysis and refinement work must
occur in order to assure certainty (i.e. lower risk). As the fuzzy curve begins to flatten a Program
Commitment decision is usually made.
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Figure 2 - The Fuzzy Curve.
In understanding the driving factors of a successful FFE, invention and innovation need to be fully
differentiated. Invention alone is not innovation. Technologists are often focused on generating
Intellectual Property (IP) and in the process lose sight of the overall goal of innovation.
Invention is something new and useful,
not obvious to someone skilled in the art
- common patent law
“Technological Innovation involves a novel combination
of art, science, or craft
employed to create the goods or services
used by society.”
1
- Innovation Explosion
Invention and innovation interact in the product lifecycle as shown in Figure 3. Innovation can
also be more commonly defined as generating economic importance to invention. By adding
business and market analysis to invention, innovation is born.
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3. © 2003 SheepShank LLC
Figure 3 - Invention and Innovation in the Product Lifecycle.
Adding Project Management to the Fuzzy Front-End
Normally, the focus in FFE activities deals with the business development and technical feasibility
of the proposed new product. Marketing is most concerned with gaining market share, and
producing revenue as a function of the feature set. Technologists usually focus on optimizing the
features and minimizing the risk associated with the commercialization of the technology. While
both of these activities are important, the actual development time and cost can weigh heavily
into the overall profit equation. Often, the project planning phase (using the Project Manager) is
done as a final exercise either directly before or after the Program Commitment milestone. This
logic is flawed because the New Product Development phase is de-emphasized leading to a
potentially devastating outcome on new products with long Development or short Revenue
Generation phases. The Project Manager has the best visibility into the resources, milestones
planning, and historical development data to plan, predict, and estimate the Product Development
phase. If the Project Manager is included as an iterative part of the FFE, the importance of form,
fit, function and technology at Product Introduction, can be properly evaluated against the
development cost and schedule for the overall product lifecycle.
The skills needed to define the successful Project Manager differ significantly from those of the
Technologist or Marketer. Technologists are idea oriented and apt to applying concepts in a very
constrained manner to build confidence. Marketers naturally think in broad terms when doing
business development and are less likely to focus on the details. They thrive on ambiguity and
adversity. The Project Manager has the ability to build the bridges between these two disciplines.
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Deborah Bigelow, from her white paper , titled “What Makes A Good Project Manager?” finds the
following attributes as common in successful Project Managers:
- Love of their work … and embracing the challenges
- Clear vision … and communicating this vision
- Strong team building skills… and setting positive tones
- Structure and alignment… creating the environment and direction
- Strong interpersonal skills… listening to and leading their teams
- Discipline… completing each phase of the project properly
- Communication skills… knowing when and to whom to communicate
Few Marketers or Technologists exhibit these traits at the same skill level as the Project
Manager. These same traits can be most effective in taking an idea and generating the
deliverables for Program Commitment. By assuming the role of facilitator during the FFE, the
Project Manager can transform chaos to order by the time of Program Commitment. Through
driving towards Program Commitment and defining the tasks required to produce the
deliverables, the fuzzy curve of Figure 2 becomes steeper. After all, the Project Manager has the
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most to gain by having this order before the project starts. However, attacking this chaos with
predefined processes and algorithms is not effective for true ideation and innovation. Some
chaos must exist that enables innovators to think freely without boundaries. The goal to
implementing an effective FFE methodology is to transform this chaotic, creative, and energetic
phase into a path using the company’ vision and product strategies to meet the deliverables
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needed for the decision at Program Commitment, as shown in Figure 4.
Figure 4 - An Effective Approach to the Fuzzy Front-End.
A typical solution is to build Subject Matter Experts (SMEs) in each discipline. (I.E. They all have
very specific skills rooted in their job function.) This approach limits the ability of what the team
can accomplish. Whether a player in the FFE is the Project Manager, Marketer, or Technologist;
trades of their profession should be treated as skills. This means that a combined understanding
of ROI and risk needs to permeate across all members of the team. To achieve this, the team
functions as a single unit stepping out of their own specific titles. If they remain locked into their
defined responsibilities as SMEs, the synergy across all disciplines will fail, thus stifling true
innovation.
An Analytical Approach to Chaos
If the only common criteria for the Program Commitment decision are ROI and risk, how can the
Project Manager tame the chaos of innovation to the order required for a decision to start the
project? To do this the Marketer must be willing to move out of the realm of broad and fuzzy.
Likewise the technologist must seek to expand their thinking, building an area of commonality that
both disciplines can communicate towards innovation. One method is to lock down the smallest
set of analytical constraints that must be shared between business, technology and management
into a function of ROI for the new product. Typically this can be narrowed to six major variables
as follows:
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Return-On-Investment (ROI) = f x1,6
x1 = Market Demand
x2 = Product Price
x3 = Product Introduction
x4 = Product Cost
x5 = Non-Recurring Costs
x6 = Program Commitment
Market Demand is the revenue generating capability of the new product. This is most closely
linked to the feature set and is very time dependent due to new technology developments and
competition within the market. This variable is extremely subjective and will initiate most of the
debates. Product Price or pricing strategy is usually a method to control market share. However,
in a highly competitive market the competitor pricing mostly sets product price. Product
Introduction is the date when the product is available to the customer. This can be general
availability for a me-too product or beta release for an entirely new product concept requiring
customer acceptance. Figure 5 shows a product revenue function using Market Demand,
Product Price, and Product Introduction. Note the Manufacturing Discontinued date does not
change with a fixed feature set.
Figure 5 - The Business Equation
Product Cost or cost-of-goods is the dollar amount to be spent by the company to produce each
product shipped. Non-Recurring Costs are normally development costs and one time
manufacturing start-up costs. And finally, Program Commitment is the project start date and
gates all of the variables. Figure 6 shows how a Development is normally optimized for lowest
Non-Recurring Costs, but can sacrifice Product Costs and Product Introduction on a project
overrun.
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Figure 6 - The Project Management Equation
By understanding how the graphs of Figure 4 and Figure 5 come together for ROI is key to the
decision process in the FFE. This is not an easy task and will potentially require a different
approach for each type of product.
Just as important as ROI is risk. Instead of brainstorming what could go wrong to generate risk, a
much more effective method is to analyze the risk outcomes. This is accomplished by pushing
the variables in the ROI function outside the normal range and recalculating ROI. An example
would be to drop the Market Demand by 50% and delaying the Product Introduction by six
months. In addition to risk, the value of improving dates like Program Commitment can be
analyzed as shown in Figure 7.
Figure 7 - How the Fuzzy Front-End changes ROI.
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Summary
To be effective in the FFE, the Project Manager must use their project management skills to bring
new concepts from the chaos of ideation to the order associated with Program Commitment. No
longer can the Project Manager act as an observer that is waiting for the hand-off to start the
project. By becoming this active participant in the Fuzzy Front-End, the Project Manager will only
strengthen their position at the time of Program Commitment. The Project Manager must come
out of the comfort zone into the phase of “ What Ifs” where ambiguity and adversity are key to
success. The Project Manager should seek to solve and adapt concepts and not be seen as
trying to minimize their own future risks. By having a positive attitude with an approach of lifting
up ideas instead of shooting them down, the Project Manager is usually accepted as a key player
in this process. As the order comes from chaos, risk can be attacked and minimized in an
efficient manner. By continuing to build commonality of business, technology, and project
management as shown in Figure 6, companies can put the most value into their innovations.
These innovations can also be greatly accelerated by using iteration of ideation, assessment, and
presentation to transform the initial idea into a positive outcome and meet the deliverables for
Program Commitment with a smooth hand-off to the Project Manager.
About the Author
As a Senior Partner with SheepShank LLC, Greg Evans is focused on efficient pre-project
planning and iterative innovation for new product development. His expertise spans twenty plus
years in commercializing emerging technologies into viable products, including joint
developments with Samsung, 3Com, Cadence, Philips, ADI, Aware, Amp, and Lucent. Greg
received his BSEE from North Carolina State University in 1981 and most recently was Director
of US R&D for Inovia Telecoms, maintaining responsibility for their Centennial Campus Lab. As
one of the founding members of BroadBand Technologies, Greg spent nine years managing the
development of leading edge technologies into mass-deployable products. Prior to Broadband
Technologies, Greg worked for ITT and Siecor as a development engineer and project manager.
About the Company
SheepShank LLC focuses on delivering effective innovation solutions for the Front End of the
Product Development Cycle by aligning Business, Development and Project Management using
Ideation, Assessment, and Presentation. The company forms partnerships with clients to assess
their needs, create a customized solution, and facilitate the implementation of a methodology that
co-exists within the company’ existing infrastructure.
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References
1. Quinn, Baruch, & Zien; Innovation Explosion (New York: Free Press, 1997).
2. Kim & Wilemon “Accelerating the Front End Phase in New Product Development” Research
Paper
3. Bigelow “What Makes A Good Project Manager?” PM Network, April 2000, Vol.14, Number 4
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