"The basic idea is to create new products and share key components but to utilize separate development teams that ensure each product will differ enough to attract different customers."
"If they follow multi-project thinking then they can try to maximize the chances that the organization will produce a stream of new product that cover a range of market segments and make the best possible use of R&D investment."
Automobiles provide an excellent case study for multi-project discipline. Car companies have numerous products and lot of projects going simultaneously. A product can have 30,00 or more components and usually take a million or more engineering hours per project to develop. The speed to market depends on part on the degree of functional activities: concept generation (decide what to design), advanced engineering (determine how a new product fits with other products), product planning (create detailed designs for components and coordinate the development of major components), process engineering (design equipment and techniques for manufacturing), and pilot engineering (low volume experimental manufacturing). The balance is determine "what is optimal for the individual project versus what is optimal for the organization". Which function should companies keep centralized to take advantage of scale and scope economies by providing engineering services and components? Which functions should companies disperse among projects in order to maximize the distinctiveness and innovation of the individual projects? How much authority over budgets and personnel should a project manager have versus managers of functional departments? To what extent should companies seek a balance of functionalilty with project management by grouping related projects together and then sharing some technologies as well as functions at least for clusters of similar projects?
1992-1993, Toyota adopted a strategy and structure specifically for multi-project management of product development. The matrix structure involves the interaction between the following personnel: division manager, platform general manager, chief engineer, and functional engineer. Yoshiro Kinbara, an executive vice president, was in charge of Future project 21 (FP21). Toyota recognized that sometimes organizations need review and overhaul to be competitive in a changing environment. Toyota had become less efficient in internal communication and had come to need more coordination tasks than before to manage new product development. Second competitive advantages of Japanese automobile production makes decreased significantly, as the rising value of the yen had made Japanese products more expensive. In 1992, there were as many as 16 functional engineering divisions ( 7,000 people) and each had a functional manager. There were also about 15 projects proceeding concurrently. Each project had a chief engineer which had coordinate people in 48 departments in 12 divisions. "In theory, chief engineers at Toyota had authority over the entire product development process." Chief engineers were finding it difficult to control and integrate different functional divisions when developing a new product. Young engineers did not always get sufficient cooperation from senior functional managers. A chief engineer selection was based on Talent and not seniority "Because of the narrow specialization and large number of projects, each engineer frequently had to move among unrelated products." This practice reduced the sense of commitment to individual projects, but managers hoped it would be useful to transfer technical know how. Toyota found that it could not transfer or utilize system knowledge very effectively simply by transferring engineers frequently." The solution was to create a pure product organization. A feeling that these were their projects was nurtured for the chief engineers.
Change was in the works, Toyota executive concluded that multiple related projects needed more coordination. The management of individual projects was too independent. Overlapping projects needed to share technology making it possible for engineers to combine project tasks. Hits=58 Multi-project design gives project managers more authority and decision making capability for product concepts, detail component design, component reuse, schedules, budgets, and personnel; a migration towards heavy weight project managers. Project centered design break down walls between functional departments and bring different departments together toward a common product. Multi-project is more responsive than matrix structure, "we also believe that simply promoting technical excellence through a functional organization is inadequate in today's competitive markets. Customers around the world now expect high-quality, reasonably priced products that reflect a skillful integration of different components and subsystems as well as different functions, such as design and manufacturing. For complex products, it is not possible to create individual components and sub-systems independently; companies have to integrate functional departments in some way." "70 percent of design changes during a project come from inter face problems between sub system components." Integrating the various components and subsystems is better suited to project teams. "To integrate across one or more projects, multi-project manage requires a level of control above the project manager that coordinates different projects as well as individual functional departments and individual engineers." Project managers for concurrent technologies need to meet with project managers to discuss cross functional integration and coordination with other projects: direct coordination with other project managers (49%), coordination with general managers (35%), coordination with functional managers (12%) and direct communication with engineers (4%).
In 1992, Toyota divided all product development into three development centers: center 1 for rear-wheel drive platforms, center 2, for front-wheel drive platform, and center 3 for utility vehicle/van platforms. Each center having 1,500 to 1,900 personnel and working on 5 new vehicle projects simultaneously. In 1993, Toyota created center 4, the Research and Advanced Development Group, too develop components and systems for all vehicle projects. Hits=140 The restructuring of product development was designed to reduce the number of functional engineering divisions, reduce the number of projects for each functional manager, change roles for center heads, establish planning division for each center, adopt a hierarchical organizations for chief engineers. Toyota lessened the specialization of the functional engineering division. Each division had a wider design responsibilities. Chief engineers kept components needing extensive tailoring within the project, instead of being developed by center 4. Chief engineers would design which components could be built with modular design to be inserted into product; center 4 would build these components and share them with multiple projects; Toyota executives decided to use Center 4 to build components requiring a lot of new technical knowledge; such development required a group of technical specialist working together. Widening engineering specialization within the division reduced the number of functional divisions. The functional manager now could spend more time coordinating with the chief engineer. Each center has a general manager. "The general manager head supervises all product development operations and personnel, including both chief engineers and design engineering functions within the center." "Toyota did not want general managers above the chief engineers manage the details of each project." The center head role was to help each chief engineer integrate different engineering functions. Chief engineers had found it difficult to coordinate the growing number of functional managers. The chief engineers could rely on the general managers to deal with the different functional divisions. Each center had a planning division of 170 to 200 people supporting the center head: administration department, cost planning, and product audit. The administration department takes charge of personnel management, resource allocation, and long term product portfolio planning. The cost management staff reports center's planning division manger and the center head, although they continue to work closely with the chief engineers.
Knowledge retention and transfer mechanism, research group, Yaichi Aoshima, found that archival based mechanism, such as documents, reports, written engineering standards, and computerized tools, were more effective in promoting knowledge retention. Integrative knowledge was better transferred on a individual based mechanism, primarily face-to-face communication. Engineers communicated experience they have learned. For example integration of engine and transmission in car body, "Engineers need to learn how to do this kind of design work through experience." "Aoshima found that companies which placed a lot of emphasis on mechanisms to retain prior knowledge had special problems introducing very new designs. They were not as innovative as firms that paid less attention to knowledge retention."
Multi-project strategies and Project performance propositions: 1. Projects using the new design strategy should require the longest lead time and the most engineering hours because these project build most components from scratch and probably try to maximize innovation 2. Concurrent technology transfer require the fewest engineering hours and the shortest lead time because of potential task sharing. 3. Engineering for sequential technology should fall somewhere between new design and concurrent transfer projects. Design complexity and newness of components impacts the amount of lead time. Many times these new components do not add any new technical features or functions. It is important to distinguish components that incorporate technology new to the firm. This is measured by a innovation ratio index and higher index values means more engineering hours required, extra hours devoted to conceptual design, prototypes, and testing; this means longer lead times and more hours. New technology tends to require new manufacturing equipment. "A question in our survey revealed that, on average, 66 percent of engineers in the US projects fully dedicated their time to a single project, while only 41 percent o the Japanese engineers did." "But the dedicated project team approach, while fast because team members have few distractions, does not seem to be so efficient in engineering hours."
Priorities, most managers reported from new design projects placed more emphasis on new technology (63%) than lead times (74%). Far more managers valued functionality and performance than cost (74%) or lead time (78%). In contrast project carrying over from sequential development, cost became the critical objective