The Basic Business Obligation

A product is developed for the market place to (1) fill a need, (2) function properly & reliably, (3) look & feel nice, (4) generate profit, (5) promote consumer the environmental health and, sometimes, (6) buy into a market. This article looks specifically at the fourth requirement, the generation of profit, as this is the basic business obligation of product development. It is assumed that need, functionality, consumer and environmental protection and aesthetics will be properly attended to in the pertinent development phases of the project (refer to other literature for such disciplines as Focus groups, Industrial Design, Concurrent Engineering, DFM, DFA, Project Management, Scheduling, Budgeting, Design for the Environment (DFE), etc.). Refer to other pertinent articles regarding the technical and business aspects of product development. Buying into a market is altogether another discussion.

The methodology is simple in concept, but more difficult in implementation: start the product development process by thinking in as much detail as possible about the types of costs (categorized below) expected to be incurred throughout the entire life cycle of the product. Then identify what can be done in the conception, design, development, and production and support processes to be able to least expensively design, test, replicate, distribute and service the product without sacrificing the functionality, reliability, extensibility and usefulness of the product. Generally, profit will be maximized and the project time frame will be minimized if these activities are honestly and deliberately scrutinized up front.

A Cost-Driven Approach

This top-down, cost-driven methodology is based on the following three assumptions, whose foundation is mostly experiential.

1. Any product development effort has an investment (timing and funding) limit.
2. A product designed for high quantity production requires a different development strategy than does a low quantity product.
3. A highly complex product requires a different development strategy than does a simple product.

Employing the relationships between the expected quantities of the product to be produced and distributed and the product's complexity allows one to effectively partition development project costs. The Quantity-Complexity Matrix, described below, exhibits this method.