Value Creation in the Product Development Process

A framework for value creation in the product development process is proposed as an aid for visualizing and understanding value in complex processes and thus guiding resource allocation, process measurement, and process improvement. The framework is based on information received from a variety of industry site visits and stresses process value. It defines process value in product development as the approach of the enterprise in creating a desired product for the customer, continuing profit for the shareholder, and lifetime satisfaction for the employee. The four principal elements of the framework include tasks, resources, environment, and management. These elements are further divided into several levels of value attributes, affording a constructive view of value creation.

Several sets of data provide observations on portions of the framework. An analysis of industry work breakdown structures revealed (i) tasks contribute markedly different types of value among programs, implying that no single definition of "the product development process" exists at a detailed level, (ii) lower level tasks contain more enabling activities, supporting the notion that
improvement efforts should focus at a detailed level of the process, and (iii) programs transitioning to lean include more tasks emphasizing cost/schedule, advocating that companies should recognize cost/schedule more explicitly. A survey showed that engineers spend over 70% of their time on communication-related activities, suggesting that achieving effective communication should be a priority of process improvement efforts. Finally, programs using earned value management had greater consistency and fewer delayed tasks than programs which tracked task completion dates only.