MEeng 6012-Product Design and

Development-I
 Reference book

Product Design and Development by

Karl T. Ulrich and Steven D. Eppinger
5th Edition, Irwin McGraw-Hill, 2012.
 Introduction
• Product: anything that can be offered
to a market that might satisfy a want or
need.
• Design: Realization of a concept or
idea into a configuration, drawing,
model, mould, pattern, plan or
specification.
• Development: The systematic use of
scientific and technical knowledge to meet
specific objectives or requirements. An
extension of the theoretical or practical
aspects of a concept, design, discovery, or
invention.
 Chapter Outline
• Characteristics of successful product
development
• Who designs and develop products
• Duration and cost of product development
• The challenges of product development
• Structured methods
• Organizational Realities

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 Research and Development

R T D
Basic Technology Product
Research Development Development
• Discovery process • Loosely structured • Structured methods
• No set timing • Difficult to plan • Planned timing
• Unpredictable returns • Less predictable • Predictable outcome
• Long term • Medium term • Short term
 Changing Dimensions of
Competition

Manufacturing: Product Development:

Cost and Quality Features and Function

Competitiveness today is more than ever based

on product development capability.
Creating Value through
Product Development:

It’s all about the product.

Apple: Simply Better Products
Black & Decker Snake Light
iRobot Roomba
• Roomba is a series of autonomous
robotic vacuum cleaners sold by iRobot.
• Roomba was introduced in 2002.
• As of Feb 2014 , over 10 million units have
been sold worldwide.
• Roomba features a set of basic sensors that
help it perform tasks.
 Characteristics of successful product
development
• Product quality (features and value)
– does it satisfy customer needs?
– Is it robust and reliable?
– Product quality is ultimately reflected in market share and
price that customers are willing to pay.
• Product cost: factors considered as follows:
– Capital and Tooling cost ( Equipments)
– Manufacturing cost
– Labour cost
– Marketing cost
– Profit
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• Development lead time
– Time taken to complete the product to
introduce in the market
– How quickly the firm receives the economical
returns.
– Time taken to meet out the technological
challenges and competitive forces.
– Responsive time of team effort
• Development cost:
– Cost required to develop a product
– Significant investment required to achieve the certain profits
• Development capability:
– Experience of the team.
– More effective and economical
 Today’s business environment
– Innovation
• Be the first in the market
– Shortened product life cycle & shortened product
development cycle
• concurrent engineering/operation
– Frequent changes & agile operations
• mass customization
– Smaller lots and just-in-time production
• lean manufacturing/thinking
– Core business and supply network
– Global economy and corporate intelligence
– Internet and wireless integration

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 Product Life cycle
• It is an important concept and requirement
in marketing.
• It explains the stages of a product from
starting to until removed from the market.
• Not all products reach this final stage
• Some continue to grow and others rise
and fall
 Interdisciplinary activity
• Interdisciplinary design can be defined as a
designer or group of designers whose practice
generates work in two or more disciplines. Or
• Interdisciplinary design is through the process of
developing design solutions with a group of
professionals from different disciplines and/ or
non-professionals.
• Industry revolution transferred the manufacture of
expertise into mechanized production, and
technology became more common.
• More and more new stuff was needed to
innovate and creative.
• Under this background, the transfer of
knowledge extended to different
businesses.
• Such as, workers were trained in industrial
techniques, and engineers became
interested in science.
• Inter-disciplinary study satisfies the
demands of social development and
increases cooperation.
• The process of figuring out problems with
design should not be confined to a single
area, such as painting, graphic design, or
architecture.
• It is in this combination of design and
technologies from other fields, in which we
can see the origin of interdisciplinary
design.
 Who design and develops
products?
• Almost all department contributions are
required for the successful product.
• Major role of departments are as
follows:
1.Marketing :
i. Interactions between the firm and
customers
ii. Identifications of market opportunities
iii. The definition of market segments
iv. Identification of customer needs
v. Sets prices
vi. Overseas the launch and promotion of
the product
 2. Design
• Definition of the physical form of the
product to meet the customer needs
• Design functions may be two types:
– Engineering design- mechanical, electrical,
software etc.
– Industrial design: aesthetics, ergonomics,
user interfaces.
Why Study the Design Process?
• Continuous need for new, cost effective, high
quality products
• Today’s products are complex and require a
team of people with different backgrounds to
take an idea from concept to market
• ~85% of problems with new products not
working as intended, taking too long to bring
to market, or costing too much are the result
of a poor design process
Measurement of the design process
• Product Quality – How good is the product
• Product Cost – What is the manufacturing
cost
• Development Time – How quickly was the
product developed
• Development Cost – How much was spent
to develop the product
• Development Capability – can the team be
better able to develop future products
3 measures of design

Cost Time

Quality
 3.Manufacturing
• Responsible for designing and
operating the production system in
order to produce the product.
• Manufacturing functions such as
purchasing, distribution and installation.
The composition of product
development team for an electro-
mechanical product of modest
complexity
 Product development team –
core team
• Marketing professional
• Design professionals
– ME
– EE
– Industrial designer
• Manufacturing professionals
– Manufacturing engineer (manufacturability)
– Purchasing specialist (supply chain)
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 Product development team –
extended team
• Legal, sales, finance professionals
• Consulting firms
• Government agencies
• Universities
• Environmental groups
• Professional regulatory groups (such as the
ASME)
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 Benefits of integration
• The best practice is to involve a team of
people representing the necessary
disciplines and skills (a cross-functional
team)
• Note:
– Assemble your project team of multi-
disciplinary backgrounds as required.

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 Duration and cost of product
development
• Most of the product developments starts
from without expereince
• Very few products are possible in less
than one year, many requires 3 to 5
years and some take as long as 10
years.
• Table showing the approximate scale of
product development
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 Cost of product development
• It is roughly proportional to the number
of people working in the project team
and duration of the project.
• Cost for development effort
• Investment for equipment and tooling
for production
 Time to market
• Time to market is the amount of time it
takes to complete the product
development project. It is by far the most
important factor affecting the internal rate
of return (IRR) on the product
development investment
• By creating a financial model that determines
IRR for a new product based on a number of
variables including time to market has been
analyzed. The following results were impressive:
• 12 months reduction in time to market increases
IRR by approximately 92%
• 9 months reduction in time to market increases
IRR by approximately 63%
• 6 months reduction in time to market increases
IRR by approximately 39%
• The above relationship are not affected by
changes in other variables including product life
or product profitability for the most part.
Length of product development effort in month
 Investment ratio
• Annual Gross profit generated by sales to the
cost of development
• IRR falls as the ratio of profit to investment falls
• A a ratio of 600%. IRR of a project done in 21
months is 34%. If the project could be finished in
12 months, The IRR would increase to 56%.
• A a ratio of 120%. IRR of a project done in 21
months is 11%. If the project could be finished in
12 months, the IRR would increase to 17.8%.
 Interdisciplinary knowledge and
research are important because:
• Creativity often requires interdisciplinary
knowledge.
• Immigrants often make important
contributions to their new field.
• Disciplinarians often commit errors which can
be best detected by people familiar with two
or more disciplines.
• Some worthwhile topics of research fall in the
interstices among the traditional disciplines.
• Many intellectual, social, and practical
problems require interdisciplinary
approaches.
• Interdisciplinary knowledge and research
serve to remind us of the unity-of-
knowledge ideal.
• Inter-disciplinarians enjoy greater flexibility
in their research.
• More so than narrow disciplinarians, inter-
disciplinarians often treat themselves to the
intellectual equivalent of traveling in new
lands.
• Inter-disciplinarians may help breach
communication gaps in the modern
academy, thereby helping to mobilize its
enormous intellectual resources in the
cause of greater social rationality and
justice.
• By bridging fragmented disciplines, inter-
disciplinarians might play a role in the
defense of academic freedom
 Challenges of product
development
• It is very hard
• Some of the companies are highly
successful more than half the time.
• It is significant challenges for the
development team.
 Challenges of product
development characteristics
• Trade-offs:
The product can be made with high performance
but it increases the cost of product. For example
airplanes, locomotives ,automotive etc.
one of the most difficult aspects of product
development is recognizing, understanding and
managing such trade-offs in a way that maximizes the
success of product

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• Dynamics in the environment
– Technological improvements, customer
preferences and competitor new products and
macroeconomic environment shifts.
– Decision making in an environment of constant
change
• Tremendous amount of design details
– There are many choices are available for design
a product. For example computer printer may
be enclosed by using either screws or snap-fits.
This will make a lot of million dollars profits.
– Developments of new product have many
thousands choices for such decisions
• Time pressure
– Product development time must
be shorter.
– Complete information must be
provided
– It is inversely proportional to
product cost
• Creation
– begins with an idea and ends
with a final product
– If the developer think in both
entirely and at the level of
individual activities, then the
process will be intensely
creative.
• Satisfaction of societal and individual needs
– All products are aimed at satisfying needs of some
kind. Individuals interested in developing new
products can almost always find institutional
settings which helps to satisfy the customer needs
and minds.
• Team diversity & spirit
– Better product needs more skills and talents, so
developing teams involve people with a wide range
of different training, experience, perspectives and
personalities.
– The team must be highly motivated and
cooperative group members.
 Organizational realities
– leading to dysfunctional product development team

• Lack of empowerment of the team

• Functional allegiances transcending project
goals
– That is, allegiance to functional department vs.
project success
• Inadequate resources
• Lack of cross-functional representation on
the project team
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 Structured methods
• A structured method can be a formal
project plan spread over time (such as a
milestone chart) or a method intended to
capture user needs in the early stages of
design.
• They are rule-like in that use of the
method calls for a step-by-step
progression of interactions until the result
is achieved.
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 Structured methods
• Product development process
– is a creative effort
– is a process of design-related activities,
which can be documented, studied and
improved.
• Question?
– Is product development an art or an
science?
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 Product development process
• Major steps:
– Planning
– Concept development
– Architectural (system-level) design
– Detailed design
– Testing and refinement
– Production design and ramp-up.

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 Back to the History
• Corporate stories of success and
failure:
– Nokia digital mobile phones
– Ford Sport/utility vehicles
– George Foremen grill
– Apple computer: iPod, iPad, i…
– Digital cameras
– Thermo care
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 Nokia
• There was a time when Nokia ruled,
Samsung struggled and Apple was no
where in the phone market. Now the
roles are reversed and Nokia is
struggling hard not be nowhere.
 Case study
• Nokia became the world’s largest
cellphone maker in 1998 when it overtook
Motorola
• At a time when Samsung had just entered
the industry
• And it controlled around 40 per cent of the
market for years before Apple Inc’s iPhone
was unveiled in 2007.
• "After 14 years as the largest global
mobile phone maker, getting knocked off
the top spot will come as a bitter blow to
Nokia," says Ben Wood, head of research
at CCS Insight, who has followed the
industry since the 1990s.
• What’s the reason behind Nokia’s fall?
 The possible things that went
wrong with Nokia.
COMPLACENCY
• As a market leader for over a decade, Nokia
didn’t really plan for the future its products.
• When Apple launched the iPhone in 2007, the
first touch phone, Nokia was still priding in its E-
series by when the definition of smartphone had
undergone a tremendous change. That was least
expected from the pioneer in the smartphone
market.
• The success of iPhone didn’t have any
significant impact on Nokia, unlike Samsung,
which experimented with off-the-shelf
technologies and managed a transition to
smartphones much faster than expected.
• And Nokia, which had launched its first
smartphones through its Symbian series 60 in
2002, remained a pioneer with no better future
prospects.
• Nokia failed to anticipate, understand or
organize itself to deal with the changing times.
LACK OF INNOVATION
• While Samsung comes up with new phones almost every
year with a slight modification from the previous launch,
Nokia’s Windows phone which came in 2011 lacked
some basic technology essential to drive its sales.
• Nokia’s Lumia series was launched with a bang, but
didn’t click. Reasons can be its design, which wasn’t as
attractive as Samsung phones or the iPhone.
• Today the sale of phones is dependent on how shiny or
trendy it looks. Leave aside the looks, Nokia phones
didn’t have the front camera, which makes it not even 3G
enabled.
• And we are on the threshold of entering the 4G era. So,
Nokia’s latest phones were feature ready, but not
future ready.
Lack of Organizational goals
• Nokia’s development process was long dominated by
hardware engineers;
• Software experts were marginalized.
• Whereas, executives at Apple, in stark contrast, saw
hardware and software as equally important parts of a
whole; they encouraged employees to work in
multidisciplinary teams to design products.
• It also underestimated how important the transition to
smartphones would be. It took the competition too lightly
• Nokia overestimated the strength of its brand, and
believed that even if it was late to the smartphone game it
would be able to catch up quickly.
 Lessons learned from the
case study
• It is products like these that make companies
successful
– and competitors retreat.
• What in common is that their developers
understood their customers and their
competitors
• They created products that met or exceeded
their customers’ expectation
• With these products, these companies
became competitive at that time.
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Development and Design Process
• Phase 0: Planning – Begins with the strategy
and assessment of technology developments
and market objectives
• Phase 1: Concept Development – Identify target
market, alternative product concepts generated
and evaluated
• Phase 2: System-level Design – Definition of the
product and break-down into subsystems and
components
Development and Design Process
• Phase 3: Detail Design – Complete specification
of the geometry, material, tolerances and
manufacturing details
• Phase 4: Testing and refinement – Prototype
evaluation and assembly testing. Utilizes
prototype tooling
• Phase 5: Production Ramp-up – Completion of
production tools and process to implement
manufacturing process as well as train workforce
(work out the kinks)
 Development Steps
• Step #1: Identify Need
– Two sources: the market (market-pull), or the
development of a new technology (technology
push)
• Step#2: Plan for the Design Process
– Planning involves simply deciding on how to
allocate the company’s resources of people,
money, time, and equipment to complete the
design tasks.
• Step #3: Develop Engineering Specification
– Goal is to completely understand the problem
– Three steps:
• 1)identify customers
• 2) generate customer requirements
• 3)develop engineering specifications
• Step #4: Develop Concepts
– Based on customer requirements and
engineering specs.
– Multiple concepts may be evaluated by
comparing the concepts generated to the
specifications developed. Goal is to select the
best concepts for refinement into products.
• Step #5: Develop Product
– Starting a project with a single conceptual
design in mind, without concern for the
earlier phases, is poor design practice and
leads to poor-quality products.
– As products are developed, the are
evaluated for manufacture, assembly,
behavior, and cost
 Development Steps (cont)
• During each stage of the design process, we
must be able to communicate the information to
others (recall concurrent design).

• Design Notebook
• Communication with management/customers
(possibly during design reviews)
– Make it understandable to the recipient.
– Carefully consider the order of presentation:
• Present the whole concept or assembly
and explain its function
• Describe the major parts and how they
relate to the whole and its function
• Tie the parts together into the whole
 – Be prepared with quality material:
• Have good visual aids and written documentation
• Follow an agenda
• Be ready for questions beyond the material
presented
• Documents communicating the final design
– Drawings (or computer data) of assemblies and
details.
– Written documentation to guide manufacture,
assembly, inspection, installation, maintenance,
retirement, and quality control.
 Assignment-I
• Homework assignment
– Do exercise #2 on page 10
– Follow exhibit 1-3 to identify the scope of efforts
for a PC (or cellphone) development project.
• Due date: next week

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Development Processes and
Organizations

Product Design and Development

Chapter 2
Karl T. Ulrich and Steven D. Eppinger
5th Edition, Irwin McGraw-Hill, 2012.
 Product Design and Development
Karl T. Ulrich and Steven D. Eppinger
5th edition, Irwin McGraw-Hill, 2012.

Chapter Table of Contents:

1. Introduction
2. Development Processes and Organizations
3. Opportunity Identification
4. Product Planning
5. Identifying Customer Needs
6. Product Specifications
7. Concept Generation
8. Concept Selection
9. Concept Testing
10. Product Architecture
11. Industrial Design
12. Design for Environment
13. Design for Manufacturing
14. Prototyping
15. Robust Design
16. Patents and Intellectual Property
17. Product Development Economics
18. Managing Projects
Process flow diagrams for three
Product Development Process
• Generic Product Development Process
• Rapid Iteration(Spiral) PD Process
• Complex System PD Process
 Rapid Iteration(Spiral) PD
Process
Many Iteration Cycles
Concept System-Level Production
Planning Design Build Test
Development Design Ramp-Up

Mission Concept Cycle Plan Cycle

Approval Review Review Review
 Complex System PD Process
Design Test

Design Test
Concept System-Level Integrate Validation
Planning Development Design and Test and Ramp-Up
Design Test
Mission Concept System Production
Approval Review Review Approval
Design Test
Generic Product Development
Process( Five phases)
Phase-I Phase-II Phase-III Phase-IV Phase-V

Concept System-Level Detail Testing and Production

Planning Development Design Design Refinement Ramp-Up

Mission Concept System Spec Critical Design Production

Approval Review Review Review Approval
 Concept
Development System Detailed Testing and Production
level Design Design Refinement Ramp-up

Mission Product
Statement Launch
 Core development stages
• Solution approach
• Concept design
• Architectural design
• Detailed design
• Process design
• Fabrication and assembly
• Test and deployment
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 1.Concept development
• A description of the form, function, and
features of a product
• A set of specifications
• An economic justification of the project.

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 Marketing
• Define market segments
• Identify lead users
• Identify competitive products
 Design
• Investigate feasibility of product
concepts
• Develop industrial design concepts
• Build and test experimental prototypes
 Manufacturing
• Estimate manufacturing cost
• Asses the production feasibility
Other functions:
Finance facilities
Economic analysis
Legal investigations
Patent issues
 2.System (architectural) design
• Definition of product architecture, with an
assembly layout.
• Division of the product into subsystems and
components, each with a functional
specification.

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• Marketing
– Develop plan for product options and
extended product family
• Design
– Generate alternative product architectures
– Define major subsystems and interfaces
– Refine industrial design
• Manufacturing
– Identify supplier for key components
– Perform make-buy analysis
– Define final assembly scheme
• Other functions
– Finance ,service : identity and issues
 3. Detailed design
• Complete specification of the geometry,
materials, and tolerances of each of the
unique parts
• Identification of all standard parts to be
purchased.
• Establishment of a process plan and tooling

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• Marketing
– Develop promotion and launch materials
– Facilitate field testing
• Design
– Do reliability, life and performance testing
– Obtain regulatory approvals
– Implement design changes
• Manufacturing
– Facilitate supplier ramp-up
– Refine fabrication and assembly processes
– Train work forces
– Refine quality assurance processes
• Sales –develop sales plan
 4. Test and refinement
• Construction and evaluation of multiple pre-production
versions of the product.
• Early (alpha) prototypes are usually built with production-
intent parts (but may not be with the intended production
processes) for testing in the designer's environment, if the
design intent and key customer needs are met.
• Later (beta) prototypes are built with parts supplied by the
intended production processes (but may not be with the
intended-assembly process), tested by customers in their
environment, and to evaluate product performance and
reliability.

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• Marketing
– Develop plan for product options and
extended product family
• Design
– Generate alternative product architectures
– Define major subsystems and interfaces
– Refine industrial design
• Manufcaturing
– Identify supplier for key components
– Perform make-buy analysis
– Define final assembly scheme
• Other functions
– Finance ,service : identity and issues
 5. Production ramp-up
• The product is made using the intended
production system.
• To train the work force and to work out any
remaining problems in the production
processes.

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• Marketing
– Place early production with key customers
• Design
– Evaluate early production output
• Manufacturing
– Begin operation of entire production
system
 Concept development (The
Front-End Process)
1. Identifying customer needs
2. Establishing target specifications
3. Analysis of competitive products
4. Concept generation
5. Concept selection
6. Refinement of specification
7. Economic analysis
8. Project planning

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 Concept Development: The
Front End Activities
Mission
Statement Identify Establish Generate Select
Refine
Customer Target Product Product
Specifications
Needs Specifications Concepts Concept(s)

Analysis
Development
Competitive Perform Economic Plan Remaining Plan
Products Analysis Development Project

Concept Development
 Identifying customer needs
• Needs in the “use” environment
• Products have to serve a real need and
affordable to the customer
• Focus on user’s needs, instead of
“wants”
• The output of this step is carefully
analyzed and construct the customer
statements originated in hierarchical list
 Establishing target
specifications
• Specifications are a precise description
of what a product has to do.
• They are the translation of customer
needs into technical terms
• Target for the specifications are set
early in the process
 Analysis of competitive
products
• Understanding of competitors product
details will give more idea for the new
development of products
• It maximize the chance of success of
the new product
 Concept generations
• To explore throughly the space of
product concepts that may be applied to
meeting the customer needs
• It includes a mix of external search,
creative problem solving with in the
team and systematic exploration of the
various solution fragnents the team
generates.
• Usually 10 to 20 concepts are set
 Concept selection
• It is the activity of selecting a
appropriate concepts among the various
concepts by analyzing and eliminating
least prepared.
• It requires the several iterations and
may initiate some new concept
generation and refinement
 Refinement of specifications
• The target specifications set earlier in
the process are revised after concept
has been selected.
• The team must commit to some specific
values
• The limitations identified through
technical modeling and trade offs
between cost and performance.
 Economic analysis
• The team must analysis the economic
of the product with the help of finance
department.
• Development cost and manufacturing
cost are estimated
• This analysis must be done before start
the project
 Project planning
• The team must create the detailed
development schedule, devices a
strategy to minimize development time
• Identify the resources required to
complete the product development
 Adapting the Generic product
development process
• Market pull products
• Technology push products
• Platform products
• Process-intensive products
• Customized products
• high-risk product
• Quick build products
• Complex systems
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 Variants
• Market-pull products
– The firm finds a market opportunity and a technology
to meet customer's needs. Thermo care.
• Technology-push products
– The firm begins with a new technology and then finds a
market for it. Glue for “post-it.”
• Platform products
– Use of a proven technology platform to build a new
product. Instant film used in Polaroid cameras.
• Process-intensive products
– Develop product and process simultaneously.
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 Variants
• Customized products
– Build a new product by varying existing configurations.
• High-risk products
– Intensive and early test and analysis
• Quick-build products
– Rapid modeling & prototyping at testing phase
• Complex systems
– Subsystems and integration worked by teams

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 Traditional design methods
• Aggregation
– (include new functions)
• Adaptation
– (adapt to new conditions)
• Application
– (apply a proven technology to a new area)
• analysis of properties
– (thorough analysis of an existing design to improve)
• Brainstorming
– (find many solutions to a problem)
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 Traditional design methods
• Systematic search of field
– (obtain complete possible information)
• Questioning
– (apply a system of questions to produce mental
simulation)
• Mental experiment
– (observe an idealized mental model at work)
• Value analysis
• Evaluation
– (find best variant among a few by point-counting)
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 Traditional design methods
• Invention
• Iteration
– (to solve a system with complicated interactions)
• Experimentation
• Division of totality
• Math & computer modeling

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Tyco Product Development Process

DEFINE CONCEIVE DESIGN OPTIMIZE VERIFY

Project Concept Feasibility Preliminary Final Product Process Post-Launch

Launch
Registration Definition and Planning Design Design Verification Verification Assessment

RP RP RP RP RP RP RP RP RP
0 1 2 3 4 5 6 7 8
Tyco Product Development Process
 AMF (American Machine Foundry)
Development process
• AMF Bowling is a market-pull enterprise.
• AMF generally drives its development
process with a market need and seeks out
whatever technology is required to meet that
need.
• Its competitive advantage arises from strong
marketing channels, strong brand
recognition, and a large installed base of
equipment, not from any single proprietary
technology.
• For this reason, the technology-push approach would not
be appropriate.
• AMF products are assembled from components fabricated
with relatively conventional processes such as molding,
casting, and machining.
• So the AMF product is clearly not process intensive in the
way a food product or a chemicals.
• Bowling equipment is rarely customized for a particular
customer;
• most of the product development at AMF is aimed at new
models of products, rather than at the customization of
existing models.
• For this reason, the customization approach is also
inappropriate.
• AMF chose to establish a development process similar to
the generic process.
 Product Development
Organizations
• In addition to crafting an effective
development process, successful firms must
organize their product development staffs
effectively.
• The several types of organizations used for
product development and offer guidelines for
choosing among these options.
 Important Factors in an
Organization’s Environment

❖Suppliers

❖Distributors

❖Competitors

❖Customers

116
 Types of Task Interdependence
in Organization Design

Pooled Sequential Reciprocal

C C C

A B A B A B

Simple Complex

117
 Organization Design Options
Virtual Design
Complex
Network Design

Multinational Design
Environmental

Multidivisional Design
Factors

Product Design

Place Design

Simple Functional Design

Pooled Technological Factors Reciprocal

118
Mechanistic and Organic Organizations
❖Mechanistic organization
❖Characterized by a reliance on formal rules
and regulations, centralization of decision
making, narrowly defined job responsibilities,
and a rigid hierarchy of authority
❖Organic organization
❖Characterized by low to moderate use of
formal rules and regulations, decentralized
and shared decision making, broadly defined
job responsibilities, and a flexible authority
structure with fewer levels in the hierarchy
119
 Characteristics of Organization

❖The organization operates according to a set

of rules that are intended to tightly control
employees’ behavior
❖All employees must carefully follow extensive
impersonal rules and procedures in making
decisions
❖Each employee’s job involves a specified
area of expertise, with strictly defined
obligations, authority, and powers to compel
obedience
Chapter 14: Designing 120
Organizations
 Organizational Uses of
Product Design

❖ Reduces the information overload that managers face in

a purely functional design
❖ More effective handling of the business is possible
❖ Addition of product lines, diverse customers, and
technological advances increases the complexity and
uncertainty of an organization’s business environment
❖ Product design may incorporate features of functional
and place designs into the organization of each product
division
121
 Characteristics of Organization

❖Each lower-level position is under the tight

control and direction of a higher one
❖Candidates for jobs are selected on the basis
of “technical” qualifications
❖The organization has a career ladder;
promotion is by seniority or achievement and
depends on the judgment of superiors

Chapter 14: Designing 122

Organizations
 Organizational linkages
• Reporting relationship
• Financial arrangement
• Physical layout.

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 1. Organizations are formed by
establishing links among Individuals
• A product development organization is the scheme by
which individual designers and developers are linked
together into groups. The links among individuals may be
formal or informal and include, among others, these types:
• Reporting relationships: Reporting relationships give
rise to the classic idea of supervisor and subordinate.
These are the formal links most frequently shown on an
organization chart.
• Financial arrangements: Individuals are linked by being
part of the same financial entity, such as that defined by a
particular budget category or profit-and-loss statement.
• Physical layout:
• Links are created between individuals when they
share the same office, floor, building, or site. These
links are often informal, arising from spontaneous
encounters while at work.
• Any particular individual may be linked in several
different ways to other individuals.
• For example, an engineer may be linked by a
reporting relationship to another engineer in a
different building, while being linked by physical
layout to a marketing person sitting in the next
office. The strongest organizational links are
typically those involving performance evaluation,
budgets, and other resource allocations.
2. Organizational links may be aligned
with functions, projects or both
• According to their function : responsibility
usually involving specialized education,
training or experience. For example marketing,
design and manufacturing.
• Under finer division marketing research.
Market strategy. Stress analysis, industrial
design, human factors engineering, process
development and operations management
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• Regardless of functions, individuals apply
their expertise to specific projects.
• Project is a set of activities in the
development process for a particular
product and includes
• For example identifying customer needs.
Generating product concepts etc.
These two classifications must overlap:
Individuals from several different functions will
work on the same project. Also, while most
individuals are associated with only function,
they may contribute to more than one project
 Classification of organization
Strict functional organization:
• A group of marketing professionals, all sharing
similar training and expertise.
• These people have to report to one manager
who would evaluate them and desired their
salary.
• All people will sit in the same building. There
is no strong organizational links with other
members of each project team.
Strict project Organization:
• Group of people from several different functions.
• With each group focused on the development of a
specific product.
• Every one have to report to project manager who has
more experience.
• Performance evaluation done by project manager.
• They may be placed in same building as much as
possible.
• New ventures or start-ups are the most extreme
example of project organization
 Matrix organization
• A hybrid of functional and project organizations
• Each individual is linked to others according to
both the project they work on and their functions
• Each has two supervisors: project manager and
functional manager.
• Two variants of the matrix organizations
– Heavyweight project organization (i.e., strong project
links).
– Lightweight project organization (strong functional
links).

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 Matrix organization
• A matrix organization is a blended organizational
structure.
• Although a functional hierarchy is still in place, the project
manager is recognized as a valuable position and is
given more authority to manage the project and assign
resources.
• Matrix organizations can be further divided into weak,
balanced, and strong matrix organizations.
• A weak matrix gives more authority to the functional
manager (FM), whereas the strong matrix gives more
power to the PM. As the name suggests, the balanced
matrix balances power between the FM and the PM.
The difference between the three is the level of authority
given to the project manager (PM).
 Factors for affecting an
organizational structure
• Importance of cross-functional integration
• Criticalness of cutting-edge functional
expertise to business success
• Utilization of resources from each function
• Importance of product development speed

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 Choosing an organizational
structure
• How important is cross functional
integrations?
• How critical is cutting edge functional
expertise to business success?
• Can individual from each function can
fully utilized for most of the duration of a
project?
• How important is product development
speed?
 Resource Usage

No significant Is the company Pilot plant may Dedicated team

Safety relationship. willing to subcontract enable potential may help reinforce
any responsibility for hazard to be safety objective.
safety? detected.
Performance Objectives

** *

Market Competitiveness
No significant Strict quality Pilot plant may Dedicated team may
Quality relationship. standards need to enable better quality help to reinforce
be communicated to learning. quality objective.
any subcontractor.
** *
Need to have Does subcontractor Pilot plant would be Dedicated team likely
Flexibility development capacity development imply dedicated so to be more flexible if
to respond quickly to reduced flexibility? increase flexibility, all necessary skills
accelerated but may have scale- are represented in it.
development needs. up problems.
** *
Very significant, the Subcontracting Pilot plant is likely to Dedicated team likely
Cost larger the development to be more expensive to be more expensive,
development team specialists may that using partners’ functional organisation
the higher the cost reduce total capacity. usually gives higher
of development. development cost. utilisation of staff.
*
Capacity Supply Network Process Development and
Technology organisation
Size of team? Subcontract any
development? Build pilot plant? Dedicated team?
Decision areas

Operations strategy matrix for Project Orlando

 AMF Organization
• Top management of the AMF consists
of the Board of Governors (General
Assembly), and the board of executive
directors chaired by the Director
General Chairman of the board.
• The organization of the AMF is as
follows