Apple R&D and Steve Jobs Methodology: Focus on your Niche

We have discussed four components of the Steve Jobs methodology (at least what I have gleaned of it). 

1. User centric design: The entire R&D process revolves around delivering an experience to the users
2. Long-term vision:  User centric design is supported by deep understanding of technology roadmaps
3. Engaged leader: R&D managers have to be personally engaged in R&D to make the vision of a user centric design practical.
4. Small focused R&D Team: High visibility and a lot of respect for key designers.

Let us now focus on next attribute of successful R&D management: Razor sharp focus on a strategic niche.  As we have seen:

This goes back to Steve’s philosophy that the most important decisions are the things you decide NOT to do, not what you decide to do.

Again, I will be gleaning information from several sources to see if we can build a better picture.  Let us start off with the information from the transcript of an interview with ex-Apple CEO John Sculley and see what we can learn...

Enhanced R&D Risk Management

An interesting article from Sloan about How to Manage Risk (After Risk Management Has Failed).  The article is talking about risk management in financial companies, but probably applies even more to R&D.

Yet at these companies, and at others with comparable “cultures,” risk management apparently performed quite dismally. How could this be? We contend that the answer lies in the concepts and practices of traditional risk management, which tend to look for risk in all the wrong places. That is, failure did not stem from merely paying lip service to risk management or from applying it poorly, as some have suggested. Instead, collapse resulted from taking on overly large risks under the seeming security of a risk-management approach that was in fact flawed.
emphasis added

Overall message from the article is pretty straight forward:

• The traditional “frequentist” approach is based entirely on the historical record.
• The alternative “Bayesian” approach incorporates judgments to complement historical data.
• The Bayesian perspective provides more powerful and accurate results.

It is surprising that even many advanced R&D organizations delegate risk management to the quality control organization.  Many quality engineers are removed from detailed R&D activities and identify risks mainly based on past history of similar products.  So, as the article points out, R&D risks are identified based on historical failures (frequentist approach).  However, new products often bring new failure modes that are not anticipated from older products. For example, electronic accelerators in Toyota resulted in uncontrolled acceleration.  Quality engineers had failure modes and effects only for legacy mechanical accelerators.  Hence, traditional risk management would not be able to identify these new failure modes.

A better way to address this situation is the integrate risk assessment into the R&D process directly.  Engineers can then identify failure modes that they are concerned about and estimate risks based on their judgement (expert opinion). Results from testing can then be used to validate and enhance risk judgments using Bayesian statistics.  This concurrent risk assessment is much better than increasing on quality control after the design is complete.  Hence, this approach (unlike Toyota's Devil's Advocate Process) will improve quality AND reduce costs.

Apple R&D and Steve Jobs Methodology: Small Focused Design Teams

We discussed user centric design as the fundamental tenet of new product development under Jobs. We talked about how a long-term vision, bounded by user centric design and supported by deep understanding of technology roadmaps is critical to long-term success.  We also talked about how a leader has to be engaged in R&D to make the vision of a user centric design practical.

Let us now focus on next attribute of a successful R&D manager: Building strong and driven team.  Having a vision and ability to engage in the detailed R&D goes a long way towards motivating teams.  However, Steve Jobs seems to have some more characteristics that helped him become successful. Again, I will be gleaning information from several sources to see if we can build a better picture.  Let us start off with the information from the transcript of an interview with ex-Apple CEO John Sculley and see what we can learn...

How to Succeed in Distributed Product Development

As the pace of R&D increases around the world. there is in an increased emphasis on distributed product development across multiple organizations and multiple cultures.  In fact, as we have discussed, the trend is to co-design subsystems and components across multiple organizations to improve time to market.  Many observers have identified R&D management to be a significant challenge in this distributed development multi-cultural environment.

Putting It Together: How to Succeed in Distributed Product Development from the Sloan School of business has a good list of considerations (bold text below with my thoughts following) :

1. The flippant answer — “very carefully” — is also the right one: Please see this post on how to  manage virtual teams.
2. Communication must be perfectly clear, especially if the project involves people from different cultures:  See this post about spurring cross-functional integration in multi-cultural teams.   Or this one about building focused R&D communities.  See this one about keeping the team loose. 
3. Incentives must be carefully aligned: See this post for information about what drives satisfaction  in multi-cultural teams. Or this post for boosting performance of virtual teams.
4. Despite upfront planning, you still should be ready to adapt and realign as the inevitable snags occur.

Apple R&D and Steve Jobs Methodology: Engaged Leader

Let us continue our discussion on the Steve Jobs methodology. We discussed user centric design as the fundamental tenet of new product development under Jobs. We also talked about how a long-term vision, bounded by user centric design and supported by deep understanding of technology roadmaps is critical to long-term success.  However, it is not enough to just have that understanding.  A good R&D manager is able to roll up her or his sleeves and get engaged.  A leader has to take part in the product development - that is probably the only way one can really understand technology challenges and translate desired user experience into real delivered products.

In fact, when we look around, all great innovative companies seem to have leaders that are completely engaged in their R&D.  Bill Gates was driving product development personally in Microsoft's hay day.  As we have all seen, Zukerberg has personally driven R&D at Facebook.  Google had to bring back their founders to actually get back to innovating.  It is important for the leaders to be engaged because only they can have the cross organizational perspective.  Steve Jobs also seems to personify this engaged leader.  However, there may be many ways in which the leaders can be engaged.  Let us start off with the information from the transcript of an interview with ex-Apple CEO John Sculley and see what we can learn...

Why Project Networks Beat Project Teams

MIT Sloan Management Review has a great article on a new concept for R&D execution organization in Why Project Networks Beat Project Teams.  The focus is on R&D of complex systems and driving collaboration and knowledge sharing.  As frequent readers may recall, this is an area of great interest for me.  We have often discussed how increase in complexity of systems under development has been the driving challenge in R&D management.  We have also talked about knowledge workers in virtual teams and what drives collaboration and knowledge sharing in large multi-disciplinary teams.

The overall message of the article is straight forward: R&D managers should encourage at least some of the team members to bring information/knowledge from experts in their personal networks into the R&D activity.  Involvement of these non-core members (experts) was shown to increase R&D success.  Detailed learnings from the article are below:

Seven steps to better brainstorming

McKinsey Quarterly has a list of Seven steps to better brainstorming.  Clearly, Ideation is important and difficult to do well.

From R&D groups seeking pipelines of innovative new products to ops teams probing for time-saving process improvements to CEOs searching for that next growth opportunity—all senior managers want to generate better and more creative ideas consistently in the teams they form, participate in, and manage.

The article is a good read with great examples and explanations.  Below is a quick summary of the steps:

1. Know your organization's decision making criteria: Even though it is good to think outside-the-box, if the idea is going to be rejected by the culture anyway, it probably should not be pursued.
2. Ask the right questions: I can personally vouch for this one.  It is better to be focused on a particular question rather than brainstorm on any broad topic.  People come up with ideas that are far too diverse to follow through (Step 7 below)
3. Choose the right people
4. Divide and conquer: Divide into sub-teams
5. On your mark, set and go: Orient people before they divide into sub-teams (based on 2)
6. Wrap it up: Do not choose the top ideas during the brainstorming session.  End the session on a high note.  I will have to think about this one.
7. Follow up promptly: Many a brainstorming sessions have failed because of lack of follow through.  I have been part of several of these.  I think that the root cause of the lack of follow through may be step 1 and 2 above.

Apple R&D and Steve Jobs Methodology: Long-term vision

Let us continue our discussion on the Steve Jobs methodology. We discussed user centric design as the fundamental tenet of new product development under Jobs. Let us now focus on the long-term vision. I will be gleaning information from several sources to see if we can build a better picture. Let us start off with the information from the transcript of an interview with ex-Apple CEO John Sculley.

Steve had this perspective that always started with the user’s experience; and that industrial design was an incredibly important part of that user impression. And he recruited me to Apple because he believed that the computer was eventually going to become a consumer product. That was an outrageous idea back in the early 1980′s because people thought that personal computers were just smaller versions of bigger computers. That’s how IBM looked at it.
emphasis added

However, a long-term vision is not enough.  One has to break it down into manageable steps.  This is likely more art than science because many of the necessary technologies are not quite read at the time vision is generated.  So the idea is to have a clear vision in mind while working through the steps over the long-term.

When to rely on gut feelings

We have discussed papers and empirical data that show that reliance on gut feelings often produces sub-optimal results. Now we have a great explanation on why we should be careful about depending on intuition from the behavioral economist Dan Ariely (in the McKinsey Quareterly interview Dan Ariely on irrationality in the workplace):

One way to think about it is the following: imagine you stand on a field and you have a soccer ball and you kick it. You close your eyes and you kick it and then you open your eyes and you try to predict, where did the ball fall? Imagine you do this a thousand times; after a while you know exactly the relationship between your kick and where the ball is. Those are the conditions in which intuitions are correct—when we have plenty of experience and we have unambiguous feedback.

That’s learning, right? And we’re very good at it. But imagine something else happened. Imagine you close your eyes, you kick the ball, and then somebody picked it up and moved it 50 feet to the right or to the left or any kind of other random component. Then ask yourself, how good will you be in predicting where it would land? And the answer is: terrible.

The moment I add a random component, performance goes away very quickly. And the world in which executives live in is a world with lots of random elements. Now I don’t mean random that somebody really moves the ball, but you have a random component here, which you don’t control—it’s controlled by your competitors, the weather; there’s lots of things that are outside of your consideration. And it turns out, in those worlds, people are really bad.

So what is the solution?  We should experiment more and test our gut feelings before we go all out and implement a pervasive solution.

This actually, I think, brings us to the most important underutilized tools for management, which [are] experiments. You say, I can use my intuition, I can use data that tells me something about what might happen, but not for sure, or I can implement something and do an experiment. I am baffled by why companies don’t do more experiments.

I think the reason why many R&D executives I know do not experiment more is the lack of information - both about  factors driving the decision and potential impacts of the decision. For example, executives are normally forced to rely on gut feelings to decide future R&D investments.  It is difficult to experiment because R&D projects are interlinked. It is difficult to see the impact of changing one program on all the other linked programs.  Funding decisions also need to satisfy a multitude of often conflicting requirements.  There are no tools to quickly understand the impact of investments of staffing or on competitive position.  Even when information is available, it is normally at the wrong level of detail to actually make a difference.  We need tools to help executives experiment effectively in R&D management.

Apple R&D and Steve Jobs Methodology: User Centric Design

I have been fascinated with Apple's R&D successes (Platform-based approach, Portfolio Management, etc.).  I have always suspected that Steve Jobs is a significant contributor to the R&D success at Apple. So I was thrilled to find a treasure trove of information on the Steve Jobs Methodology at the website Cult of Mac (In the transcript of an interview with ex-Apple CEO John Sculley On Steve Jobs).  I think we can all learn a lot from the this article:

1. User experience centric design: See below
2. A long-term platform-centric vision to support said user experience (and perseverance to take risks to achieve the vision)
3. Leadership thoroughly engaged in R&D (e.g. Facebook, Google, Microsoft with Bill Gates, etc.)
4. Small product development teams with real respect across the organization
5. Understanding and focus on a niche (or align the entire company strategy around that niche)
6. Align hiring with product platforms / niche strategy (For Apple, hire the best)
7. The CEO defines and drives company culture!

I plan to write a post about each of the following aspects over the next few weeks.  Let us get started with user experience.

Potential R&D savings from the Defense budget

New York Times Op-Chart The Pentagon’s Biggest Boondoggles has thoughts on cutting defense R&D costs (and quite a bit of historical data).  It also mentions the GAO study that we had discussed in an earlier post:

Listed below is just a sampling of what systems could be ended without endangering America; indeed, abandoning some of them might actually enhance national security. These cuts would generate only small savings initially — perhaps just several billion this fiscal year, as contracts would have to be wound down. But savings would swiftly rise to more than $50 billion annually thereafter.

Too much positivity increases Risk

The article Organizational Culture: An Overlooked Internal Risk in Business Week has useful data about how employees tend to hide bad news:

• Nearly half of executive teams fail to receive negative news that is material to company performance in a timely manner because employees are afraid of being tainted by being the bearer of bad news.
• Only 19 percent of executive teams are always promptly informed of bad news material to company performance.

The article points out that the corporate culture drives this behavior and the employee intent is not likely malicious. Clearly, there is a confirmation bias in most organizations.  The article points out that there are likely to be several reasons for this:

1. It affirms your preexisting emotions (you wanted the meetings to go well and believe in the strategy)
2. it reflects well on your own performance (it's your job to communicate in a compelling way)
3. it is not incorrect (generally speaking, the meetings went very well)
4. perhaps you don't believe your CEO is interested in hearing contrary feedback.

The survey shows that breaking down this communication barrier brings measurable benefits to the organization. The article suggest that managers should encourage employees to speak up, help eliminate the fear of retaliation (through actions, not just words) and educate employees how to speak up / escalate issues constructively.

So what specifically can be done?  We can encourage skepticism and questioning in R&D teams.  We can reward failure to encourage risk taking and communication of bad news.  Furthermore, a questioning environment actually is shown to drive innovation.

What Makes Teams Smart

An interesting paper in Science extends the concept of intelligence to teams and defines Collective Intelligence.  Based on study of 699 people working in small teams of 2-5 people, the study found that team intelligence is driven by three factors:

1. Social sensitivity of team members increases team intelligence.  More sensitive the team members are about social cues such as facial expression, the better the team performs
2. Teams where everyone participated in the discussion were more intelligent.  If few people dominated the discussion, the collective intelligence went down.  This is something R&D managers should keep in mind.  It is very easy for managers to dominate team discussions.
3. Teams with women members were more intelligence than others.  This is likely because women tend to have higher social sensitivity than men.

Equally interesting is the list of factors that does not drive team intelligence. (via MIT Sloan Review and
What Makes Teams Smart):

Interestingly, the researchers found that collective intelligence wasn’t strongly correlated with the average intelligence of the individuals in the group — or with the intelligence of the smartest person in the group. They also found, as they wrote in Science, ”that many of the factors one might have expected to predict group performance — such as group cohesion, motivation, and satisfaction — did not.”

So what can you do about improving team performance?  Check out the article How to Keep Your Team Loose.  Or this one on where to focus on driving performance.

Hotbeds of Innovation

The Strategy + Business article Hotbeds of Innovation has some useful benchmarking information about how large corporations are accessing innovation from outside.  We have talked about Intel and others in the past.  Here are some more:

Called “ecosystem investing” by some innovation executives, it refers to the increasingly complex network of suppliers and innovators supporting large companies.
In this model, well-established U.S. companies are creating strategic partnerships with startups and small companies whose technologies and skills can help the large companies expand their own capabilities.

The idea is to gain access to the technology through strategic partnerships and alliances:

The goal of the incumbents is to systematically target emerging technologies and “harvest” ideas without having to take on the risk of acquiring the smaller companies. Sometimes the large company takes an equity stake, and its top executives may sit on the small company’s board or mentor its top management. Alternatively, it may seek to license the small company’s technology or buy its products and distribute them to global markets.

Here are a couple of results.  First from J&J:

Ortho-McNeil Inc., a J&J division, invested the modest sum of US$40 million in Metabolex Inc., a privately held biopharmaceutical company based in Hayward, Calif., so the two companies could collaborate on the development of compounds used to treat type 2 diabetes. ...
In June 2010, Ortho-McNeil received an exclusive worldwide license to commercialize several Metabolex drugs, including the diabetes compound, for about $330 million. That’s far less than the $1 billion a pharmaceutical company typically spends to develop drugs internally, and far more than Metabolex could have expected to bring in on its own.

Second from Intel:

Intel was able to dramatically increase the clout of its ecosystem investment strategy recently when it teamed up with 24 other venture capital (VC) firms as part of the company’s “Invest in America” alliance, Intel’s commitment to promote U.S. competitiveness by supporting technology development and creating jobs for college graduates. Intel put up a mere $200 million of its own money, but the VC firms pledged to match that investment, for a total of $3.5 billion over several years.

Some best practice info about R&D and innovation

The post Six Myths of Corporate R&D at Corporate Executive Boards has a convenient list of best practices for encouraging innovation as opposed to incremental improvements.  I have arranged them in three categories and my comments are in parenthesis:

1. Encourage learning
1. Organize R&D functions to encourage learning instead of alignment with corporate strategy (I am not sure both are mutually exclusive.)
2. Encourage R&D staff to form informal networks inside and outside the corporation.  (Good point, but difficult to do.IP Control will need to be a constant focus).
2. Take more risks with investments
1. Increase investment on breakthrough ideas as opposed to product improvements (The real answer is a balanced portfolio of investment.  The right balance depends on the the type of business and competitive environment).
3. Be more flexible with early stage opportunities
1. Be flexible with metrics, such as return on investment, for early stage opportunities (Clearly, it is difficult to estimate the value of breakthrough ideas.  However, it is also very difficult to identify which ideas are breakthrough...)
2. Be flexible with project reviews of early stage opportunities.  Focus instead on customer value and  related scenarios.  Review early stage opportunities as a portfolio and mitigate risks at a portfolio level.
3. Be flexible with project management and related processes.

More proof that innovation is a buzz word

The article How to Develop a Social Innovation Network, in my opinion, teaches you how not to purse innovation.

"Customers already use social technologies to wrest power away from large corporations. Now employees are adapting social technologies in pursuit of innovations to support these empowered customers; Forrester calls these employees HEROes (highly empowered and resourceful operatives)"

Innovation is not about buzz words (HEROes!) and definitely not about social networking.  We talked about innovative masses yesterday and realized that even if there are many end-users out there with some interesting ideas, filtering them for quality and adapting them to satisfy mass market quality is not normally cost effective.
 
Furthermore, sorting through ideas of varying maturity (from social media such as facebook) to identify innovation difficult at best and a complete waste of time at worst.  I remember holding an innovation challenge for employees of a large technology company.  Employees could win a prize by describe their innovative ideas in two or there sentences.  One employee suggested the company should turn trash into oil.  I asked how does one do that?  The employee said she was only going to give ideas, how to make them work was the company's problem!  :-)