“Departmental Intelligence” Makes the Difference in Product Improvement

Abstract

Manufacturing firms whose project teams acquire departmental intelligence--the ability to understand and take others' departmental perspectives--are more successful at product improvement. This is the principal finding of research I undertook in order to determine how companies might be able to manage project teams so they could be more successful at product improvement. Although product improvement accounts for much of the innovation that determines a firm's financial performance (1, 2), there has been limited research on this process (3, 4). Departmental intelligence is valuable for two reasons. First, it helps project members agree on how to improve the product in a way that all departments fulfill their requirements. Second, it encourages project members to make changes to their departmental operating routines that support product improvements as they see the importance of implementing them. What follows is how my study was conducted and what I learned. Product improvements are innovations to an existing product currently being offered in the marketplace. In this study I focus on improvements initiated by customers' concerns about the product (3,5). I analyzed how companies manage project teams to succeed at product improvement by studying 25 project teams in five photocopier manufacturing companies. I interviewed 168 people who were involved in the product improvement processes. They included top and middle managers, project leaders, and members. Within each project, I focused on product improvement initiated by users' experiences. I controlled for project complexity by analyzing projects that dealt with comparable improvements in design, such as a change in the product's chassis to make it more user-friendly and increase reliability, changes in the design to increase volume, speed and clarity of photocopying, or changes in design to include additional features such as phone, fax and scanner. Before the interviews, I analyzed each company using secondary data sources provided by the company as well as trade journals such as PC World and Consumer Reports to understand their products, technological capabilities, and strategies. A brief description of the firms and projects appears in the Table, next page. The companies are disguised to maintain confidentiality. Product improvement requires the cooperation and integration of knowledge by team members from different departments. Because the product is already in the marketplace, changes to it affect multiple departments and require their collaboration. For example, the customer service and marketing departments have to gather knowledge and information from customers about what needs improvement. The design department has to create new specifications that address customer needs. The production department has to alter its manufacturing processes to accommodate the improvements. The finance department has to change the economics of the improvements and come up with the necessary funds to incorporate them. A product improvement was considered successful when the modifications made to the product increased functional benefits to the end-users, sales, and, ultimately, increased profit for the company. Such collaboration is challenging for two reasons. First, the differences in the types of rules and regulations, goals and means of achieving them, and know-how separate departments rather than integrate them (6, 7). Team members' inability to understand and adopt each other's departmental perspectives prevents them from agreeing on how to improve the product. Proposed changes to the product made by team members from one department are rejected by members from other departments because they are incompatible with their rules and regulations, goals and know-how. For example, if team members representing the design engineering department propose the use of the latest technologies to improve the product in order to meet product regulatory requirements, representatives of the finance department might disagree because in their projections the cost outweighs the expected financial benefit, and they might not approve the budget necessary to implement the improvement. …