Organization design for new product development

Abstract

Developing a new product is a complex process that typically involves contributions of many disciplines. The more complex the product, the larger the number and arguably the heterogeneity of the people involved in the development effort. At the peak of the design effort, Airbus involved several thousand individual contributors into the development of its new A380. Automobile manufactures typically involve several hundreds of people in the core development plus additional hundreds that indirectly contribute through the network of suppliers. In the computing industry, firms typically involve several dozens of people in the development of new products such as printers, copy machines, and other electronic products. Unless the product is very simple, no single person carries out a new product development (NPD) effort on his or her own. Considering that many people from different disciplines need to be involved in the development effort, one fundamental question arises: How are they and how should they be organized to maximize the chances of successful product development? In this chapter, we aim to compile current knowledge to answer this question. Organizations developing new products face two fundamental challenges:decomposition and integration. The overall design effort needs to be broken into individual tasks and more importantly work on these tasks needs to be integrated into an overall design. Central to the question of organizing NPD is how the development actors are linked into groups. In general, organization is the result of the establishment of formal links and the emergence of informal ones among individuals so that, acting as a group, they fulfill a specific purpose such as developing a new product. Putting a formal organizational structure together implies assigning individuals to groups and creating the boundaries and scope of work for these groups. Informal organizational structures are determined by the actual communication ties that emerge between individual actors within and across groups during the development effort. As will become apparent in this chapter these two views of the organization are both important and dependent on each other.