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Flexibility Is Key to Product Development in Internet Time
When the number of Internet-based businesses took off in the mid-1990s, many long-standing rules for product innovation were blown away. Previous models of development based on a sequential process of planning and execution are not workable in the Internet age, where technologies and customer requirements are in a constant state of flux, according to HBS professor Marco Iansiti and assistant professor Alan MacCormack.
With Italian colleague Roberto Verganti, the pair coauthored a 1999 working paper, "Developing Products on 'Internet Time': The Anatomy of a Flexible Development Process." The authors propose that a process emphasizing learning and adaptation is the key to successful innovation in this emerging age.
To understand the procedures required for product evolution in these new circumstances, the researchers studied 29 completed projects from 17 Internet firms. The projects encompassed a wide range of applications, including products, services, and development tools for both commercial and individual users. Because the undertakings were so diverse, the researchers couldn't measure each project against the same performance criteria -- such as the speed of a browser or the functionality contained in a search engine. Instead, each project was assessed by a panel of industry experts, who rated the performance of the resulting product relative to others that targeted similar customer needs at the same time.
Overall, the authors found that developing products in a compressed time frame, or "Internet time," requires that firms generate and respond to new information for a greater proportion of a development cycle, with much of the feedback coming from customers. In fact, early and continuous contact with users is a key building block of the flexible development process. "For one of the products in our sample, the designers had only coded about 30 percent of the new functionality before putting it into customers' hands," notes MacCormack. "From that point on, this early version of the product became a vehicle for communicating with these customers. This partnership helped them find errors in the initial version, as well as add new features to it." Such collaboration allows a search engine like Yahoo!, for example, to respond to customer requirements by adding new types of personalized search capabilities to its Web site.
In addition, say the researchers, investments in architectural design can facilitate a more flexible innovation process. They observed successful firms creating a modular system that could accommodate the addition of new components without affecting the core infrastructure. "You don't want to redesign the architecture of the system and work out all of the interactions between modules every time you add a new function," asserts MacCormack.
The authors also found that a design team with experience developing multiple product generations is helpful in a flexible process. Indeed, the evolution of products through experimentation is what flexible development is all about. "In a traditional environment, product development is usually thought of as a recipe of tasks. You go from task A to task N, and eventually the product will get done," says Iansiti. "In an environment fraught with uncertainty, however, the process is best approached as a series of experiments. You don't know what tasks are needed to complete the product, but you can still plan which sequence of trials to run. Developing products in a turbulent setting requires a process that does not avoid uncertainty but instead allows one to both accommodate and manage it," he concludes.
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