entrepreneurship 101 - product development

Entrepreneurship 101

Product Development Basics Steve Carkner

Nov 2010

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Introduction to Steve Carkner

•  25 Year product development experience •  Award winning designer, products featured in

Popular Science, Smithsonian, Science & Tech Museum, and many more…

•  Founder and President of Panacis •  Investor, advisor and board member in many

startup companies •  Former Director of Product Development and

Intellectual Property Research at RIM •  Dozens of patents world-wide

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Introduction to Panacis

•  Medical, Military and Consumer product developer, focus on advanced power systems

•  Roots in full product development from napkin sketch to production

•  Many products launched internationally from tiny novelties sold at Wal-Mart to power systems for fighter jets and artificial hearts

•  Profitable, high growth (100% P.A.) •  Profit 100 Ranked

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Product Development Path

•  Does not matter how large or small – same basic path can be followed

•  Failure to have a plan WILL result in inefficiencies at best… complete failure at worst

•  Following a plan will dramatically increase the chances of success defined as the launch of a profitable, high quality product or service

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Let’s look at a Flashlight!

•  You might assume that a flashlight would be very easy to just “throw together” in a design

•  We will chart the development path for a flashlight against the product development path that could be used for much larger programs

•  It’s really just the number of zeroes in the budget that changes

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The “V” Model of Development

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Concept of Operations

Comprised principally of the idea behind whatever you are trying to do. •  Who wants it

•  What is it for

•  Who pays

•  What is YOUR capability in the area

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–  Wal-Mart, Road Warriors or Stocking Stuffers?

•  What is it for –  Serious lighting or Fun?

•  Who pays –  Consumer, Industrial, Government?

•  What is YOUR capability in the area –  Distributor, Designer, Manufacturer?

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We are going to build a Flashlight for Road Warriors to use in Serious Lighting situations. This will be bought by the Consumer. We will Design this product and outsource the Distribution and Manufacturing.

Entrepreneur’s Note: Cheaper is very rarely a viable business model

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Requirements and Architecture

Break down into separate documents with the first TWO being the most important •  Customer / Market Reqs. – non technical •  Functional Requirements – more technical

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Break down into separate documents with the first TWO being the most important •  Customer / Market Reqs. – non technical •  Functional Requirements – more technical •  Product / Engineering Specification – technical •  Test and Verification Specifications – technical

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Break down into separate documents with the first TWO being the most important •  Customer / Market Reqs. – non technical •  Functional Requirements – more technical •  Product / Engineering Specification – technical •  Test and Verification Specifications – technical •  Issues found during the design phase may

change the technical specifications, but will rarely change the customer and functional requirements documents

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Customer / Market Reqs. – non technical

Flashlight is: •  Durable and light weight for the Road Warrior

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Flashlight is: •  Durable and light weight for the Road Warrior •  Bright, even light, with good battery life for Serious

Situations •  Should never be left without light •  Price is only a moderate consideration •  Good place to add our special sauce such as a desire to

be the smallest, or lightest, or brightest and explain how this helps to focus on the ultimate target market

•  Good place to add competitive comparisons which we can seek to meet or exceed

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These considerations may SEEM obvious to you, but they may not be obvious to the people helping you grow your business!

Make sure everyone is going in the same direction!

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Functional Requirements – more technical

Helps to give both a fixed goal and a stretch goal •  How lightweight, example of less than 50

grams with a stretch goal of 40 grams (why?)

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Functional Requirements – more technical

Helps to give both a fixed goal and a stretch goal •  How lightweight, example of less than 50

grams with a stretch goal of 40 grams (why?) •  How bright, even, adjustable, long life, etc. •  Drop, shock, water resistance, etc.

•  This is the place to add any extra feature requirements such as onboard storage of an extra bulb (why?)

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Product / Engineering Specification – technical

Should answer “how” for many of the previous functional requirements •  Achieve weight requirement by use of small

AAA batteries

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AAA 12 Grams

AA 23 Grams

Product / Engineering Specification – technical

Should answer “how” for many of the previous functional requirements •  Achieve weight requirement by use of small

AAA batteries •  Material selection, Aluminum, Titanium? •  Achieve long run time by use of LED

technologies •  Mechanical design to meet IPXX, plus 2 meter

drops, etc.

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Test and Verification Specifications – technical

Should answer “prove it” for the previous functional and engineering specification requirements •  Test can be simple – Weigh it!

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Should answer “prove it” for the previous functional and engineering specification requirements •  Test can be simple – Weigh it! •  Light output •  Battery life •  Durability •  Every item from specification to be checked!

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Should include sensitivity analysis •  Variation •  Allowable limits

Tests focus on proving the design does what we expected and therefore will also meet the customer specification.

Tests are NOT done on every product

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Detailed Design

This is the most common product development activity to outsource •  Well written, complete requirements and architecture

documents will dramatically simplify this step •  Larger programs are often broken up and assigned in a

mix of in-house and outsourced models •  Keep an eye on the Customer Requirements, ensure

that design decisions do not impact these, it is the basis of your plan!

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Implementation

This is the building phase •  Break into smaller, easier to test and validate modules

where possible •  Create a Statement of Work for any contractor, clearly

define tasks and reference back to the specifications •  Any departure from the specifications, especially

feature creep, should be documented and a revised SOW issued, otherwise unexpected invoices and departure from plan timelines will result

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Suggested Tactic

Item # Description 5part@n Schematic Revision Level

PCB Revision Level

Mech Revision Level

Category How Fixed or Suggested Fix Open / Verify / Closed

Date Opened

Who open it?

Date Closed

Who close it?

4 Customer spec does not explain what Charge Enable signal is used for or if it can be ignored, we plan to ignore it.

0.0 0.0 0.0 Electrical This has been clarified, signal is absolute requirement. Second procesor added to design to handle it.

closed 26-Nov-07 Steve Feb-08 Rene

5 Cells have too much free movement inside housing and will easily tear connectors or slam into circuit board. New design required here.

0.0 0.0 1.0 Mechanical Manufacture carrier boards that are taped to the cells to restrict free movement and support tab structure. Pot batteries into case.

CLOSED 26-Nov-07 Eric May 23-08 Eric

6 LCD Display angle is incorrect, designed for 6-oclock view, should be designed for overhead view

0.0 0.0 0.0 Electrical Increase drive level to LCD by clocking the COM pin at 180 degrees to the segmet pin. This dramatically increases contrast and looks great.

closed 26-Nov-07 Rene 11-Mar Steve

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Create a tracking system at this point Any feedback can be reported, and tracked to closure Reduces design spin due to items “falling through the cracks”

Integration, Test and Verification

This is the Collection phase •  This portion of the program is the MOST

underestimated in terms of time and costs

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Integration, Test and Verification

This is the Collection phase •  This portion of the program is the MOST

underestimated in terms of time and costs •  Budget should include the same amount of

time and cost for this stage as was allocated to the Design and Implementation phases together

•  Pull in the modules and work created by the team and start “plugging it together”

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Integration, Test and Verification (cont)

•  It will NOT work the first time

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•  It will NOT work the first time •  Most of the problems you encounter will tie back

directly to mistakes in the technical specifications, this is where a small mistake gets multiplied by orders of magnitude in terms of cost and timelines

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•  Resist temptation to revise on-the-fly

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•  Resist temptation to revise on-the-fly •  Fix the specification, revise the statement of work,

move forward again

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•  Resist temptation to revise on-the-fly •  Fix the specification, revise the statement of work,

move forward again

•  Only fix it once, don’t break something else in the process

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System Verification and Validation

This is where you take the fully assembled product and start testing it in real-world situations •  Most of the problems you encounter will tie

back directly to mistakes in the Customer Requirements (not technical requirements)

•  The most common complaint will be unexpected operation or interactions with other equipment

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System Verification and Validation (cont)

•  A detailed system verification plan (sometimes called a Design Validation plan) is key to ensuring every element of the customer and functional requirements document is satisfied

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System Verification and Validation (cont)

•  A detailed system verification plan (sometimes called a Design Validation plan) is key to ensuring every element of the customer and functional requirements document is satisfied

•  It is possible that a mistake now can invalidate most of the work of your work (and money, and time)

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Real-World Flashlight Example

•  A large gun manufacturer was tasked with providing a portable target lighting system on their weapon. The object was to have a flashlight on the weapon so enforcement officers would not have both hands full (one with a flashlight and one with a gun)

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•  A large gun manufacturer was tasked with providing a portable target lighting system on their weapon. The object was to have a flashlight on the weapon so enforcement officers would not have both hands full (one with a flashlight and one with a gun)

•  ALL requirements were met with respect to brightness, battery life (using LED’s), weight, etc.

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The Problem (which still exists today) •  The white light from the LED’s is quite harsh and the

human eye cannot perceive contrast and detail very well with it

•  When they tried it in real life, they had a “criminal” hold either a gun, a stick, or a doll

•  With conventional light bulb flashlight they could easily figure out what the criminal was holding

•  With the LED light, they couldn’t tell •  Customer requirements did not envision this scenario,

it is now part of their spec and validation plans

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Treat Failures Like Gold!

You may be losing valuable information about product weaknesses •  Products will fail in the field in ways that cannot be

predicted, therefore any failure during small scale production testing have a very high probability of indicating a real problem, fix it now rather than recalling a product that goes to full production

•  Avoid the temptation to write off an early product failure as “because it’s a prototype”, follow the failure to a known root cause.

Operations and Maintenance

Day-to-day activities would normally include production and maintenance of the design, updates to the design and product in the field •  The verification documents used in the previous step

usually form the basis of a production test plan, a subset of tests that aims to prove the product is built correctly

•  The production test plan forms the basis of a product return validation method, anything returned by a customer would be validated using the same tests as production

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Dealing with customer support, returns and field upgrade issues is rarely budgeted for •  If you are planning a very steep deployment ramp,

there are a number of companies that you can outsource this to

•  Planning a slower deployment ramp with a friendly customer will allow you to manage support in-house

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Dealing with customer support, returns and field upgrade issues is rarely budgeted for •  If you are planning a very steep deployment ramp,

there are a number of companies that you can outsource this to

•  Planning a slower deployment ramp with a friendly customer will allow you to manage support in-house

Seek out your friendly customers!

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The Next Revision

It is normal to go to Revision #2 •  Seeding the initial market target may give you ideas on

an even larger market that you can reach with minor product changes

•  You may realize how to get more money for the product with an additional feature

•  Revision may be necessary due to a misunderstanding of the market itself

•  This is the time to allow some feature creep, now that you have experience with Rev #1

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Tools

A few project management tools will help to improve communication and reduce risk •  Gantt Chart is the most common planning tool •  Gate Review Chart more common in Military

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Gantt Chart

Allows all tasks to be managed on one sheet Assignment of resources and loading Estimates of program costs Quickly helps locate critical paths But… easy to get too deep into micro-management

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Gate Review

Also called a “Phase Gate Plan” Can be linear (as shown) or tiered Provides clear illustration of when the teams need to be brought

together to approve moving to next phase Each gate has documented set of deliverables and sign-offs Very useful when managing external resources as progress can be

charted in terms of performance, timeline and cost to be sure you are on target at each gate

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Budgeting for Development

Programs are generally over time and over budget •  It is NOT always a bad thing to be over-budget, quite often

the end product is better when an appropriate amount of “spin” is added

•  Budget can refer to dollars, to people or to time •  If you are solely responsible for the estimate, you may be an

order of magnitude too low, get a second opinion… and double it?

•  It is exceptionally rare to over-estimate a budget •  Find similar products and see if you can find out how much

it cost to develop from end to end •  Don’t expect to “beat” the predictions just because you are

a smaller team / company 52

Choosing a Partner

•  The people and companies you choose to work with will be directly responsible for the success of your idea, do you really want to go with the lowest bidder?

•  Investors are increasingly skeptical of heavily outsourced models because there is often a lack of buy-in by the outsourced company

•  Look for a partner that will ADD to your company’s reputation and will improve your chances of getting funded

•  Check references, do a search on past news releases and other information… dig

•  Be open with the companies you deal with, treat them with respect and they will be there to help you later if/when things don’t go exactly to plan

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Contracts

•  Business should be done on a handshake, with a high level of trust •  The handshake must be backed up with a contract •  A good approach is to start with an MOU (Memorandum of

Understanding), it can be a 1 page bullet list which a lawyer can then easily turn into a full blown contract

•  Ultimately, if you don’t trust the person or are nervous about the business relationship then an MOU or contract will NOT help, sometimes you have to go with your gut impression

•  A well written contract will benefit both parties in conveying more than just rates and billing practices, but should also include the statement of work to be performed and methods of dispute resolution – Get a lawyer

•  Refer back to the contract DURING the project to ensure nothing new has been added or taken away by casual verbal agreement

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One Last Look - Flashlight

•  Don’t underestimate complexity, each part of this unit needed to be designed

•  Effectively, each part is a mini-project itself

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That’s It

•  Wake Up…

•  Any questions?

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Steve Carkner President Panacis Inc.

613-727-5775x727 [email protected]

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Please send any feedback you have to me, I would like to keep improving this presentation!

entrepreneurship 101 - product development

Business

technical specifications

concept of operationscomprised

product development

road warriors

important customer market

product developmentpath

area distributor

stocking stuffers