This publication is broken up into three sections:
TL;DR - For those wanting a quick take
Summary - For those wanting a bit more context and high level points
Article - Main body of work containing fully detailed article and explanations that you might want to consume over several readings
TL;DR
I use the chef vs. cook analogy to explore how to embrace variability in new product development.
Traditional manufacturing minimizes variability, while product development benefits from it according to Donald G. Reinertsen whose insights highlight the value of variability in product development.
Variability in product development leads to innovation, positive outcomes, and valuable information. The chef as product developer embodies creativity, innovation; whereas the cook signifies reliability, and consistency.
Embracing variability leads to breakthroughs, better decision-making and requires a balance between chef's creativity and cook's reliability is crucial.
Successful product development meets market needs, fosters innovation and comes up with new recipes using timeless principles.
Summary
My article "The Chef vs. The Cook: A Mental Model for Product Development" explores the concept of embracing variability in product development and contrasts it with traditional lean manufacturing principles. I emphasise the importance of mental models and analogies in understanding complex processes like product development. I argue that viewing product development as a "Digital Factory" or a feature factory can be counterproductive and misleading.
This article draws insights from Donald G. Reinertsen's work, particularly his book "The Principles of Product Development Flow," which challenges the idea that variability should be eliminated from the product development process. In manufacturing, reducing variability is crucial for efficiency and cost-effectiveness, but in product development, embracing variability can lead to innovation, unexpected positive outcomes, and valuable information.
Donald G. Reinertsen highlights several key points:
Value of Information: Every experiment in product development provides valuable information, even if it results in failure. This information variability can lead to innovation and better end products.
Economic Cost of Delay: Striving for perfection and avoiding variability might lead to delays in product release, incurring economic costs that outweigh the costs of variability.
Exploiting Positive Variability: Variability can lead to unexpected positive outcomes, such as breakthrough innovations or serendipitous discoveries.
Flexibility in Decision Making: Embracing variability allows teams to adapt to new information or changing conditions, enabling more flexible decision-making.
My article uses the analogy of the chef and the cook to illustrate the above concepts further. A chef, known for experimentation, creativity, and innovation, embodies the mindset needed for successful product development. In contrast, a cook follows established recipes, representing the value of consistency and reliability. I suggest that product development benefits from both perspectives—a balance of foundational knowledge and the courage to explore new ideas.
In conclusion, my article advocates for a paradigm shift in product development thinking, promoting the value of variability and innovation over naive and rigid adherence to lean manufacturing principles and practices. By embracing variability, product developers can capitalize on information, optimize decision-making, and foster a culture of innovation, leading to products that not only meet market needs but also surprise and delight users.
Article
The Chef vs. The Cook a Mental Model for Product Development
How to embrace variability in product development?
Analogies and metaphors matter especially in high ambiguity, sense-making spaces like product development. The language we use to communicate how we make sense of the world is intricately tied up with how we interact with and understand the world around us.
If our mental models are defective at worst or not accurate at best then what sort of mental model best captures the essence of product development?
As a starting point if you have executives describing product development teams as being a feature factory or the other favourite term used by some consultancies ‘The Digital Factory’ then my best advice is that you should run in the opposite direction.
All hopes of being ‘Inspired’ and ‘Empowered’ are not realistic models or frameworks of ways of work in a ‘Digital Factory’. If anything you will end up being more frustrated about the idealised way Digital or Technology companies work compared to the reality you are confronted with.
Why is associating a ‘factory’ analogy to product development wrong?
Simply put the goal of most manufacturing processes is to reduce variability with respect to inputs and outputs. The ‘goal’ or objective function of most manufacturing processes can be framed as maximising value creation whilst reducing the causes of variability which usually lead to waste through direct and indirect costs.
In the context of Lean applied to manufacturing we want to reduce ‘waste’ related to the production or provisioning process for goods and services. However, Donald G. Reinertsen argues that product development is fundamentally different from manufacturing.
Donald G. Reinertsen's, "The Principles of Product Development Flow" introduces numerous revolutionary ideas that challenge traditional thinking in product development.
One of Reinertsen's distinctive insights is the idea of embracing variability rather than trying to eliminate it in New Product Development (NPD). Traditionally, especially under the influence of manufacturing's lean principles, variability has been seen as a negative force that introduces unpredictability and should be minimized or eliminated.
The above sheds light on why naively applying lean techniques from a manufacturing context to NPD will not work as expected. Innovation in NPD requires the arrival of new, well-structured information that gets transformed via an economic pay-off function otherwise there is nothing valuable to innovate on without new information.
In manufacturing, where processes are repetitive, and optimization is key, reducing variability can increase efficiency however the above is not necessarily true in NPD. The core challenge if you are engaged with innovation is the challenge of how each project needs to be approached differently but there are certain tools that can be leveraged.
The job of NPD professionals is knowing which tool to use in a given context…i.e., what type of problem am I solving and how much time and what resources do I need in order to develop a reasonable v1 solution?
With NPD if we try to focus on primarily removing variability then we reduce the opportunity to discover new information or insights which benefit from variability (i.e., this is why Research and Development and Product Discovery work is valuable if working on areas with asymmetric economic pay-off functions).
For R&D or Product Discovery to benefit from variability, they need to feed into an economic payoff function where R&D and Product Discovery is structured around making small bets that can be leveraged up based on the arrival of positive evidence and or reviewed and discontinued on the arrival of negative evidence.
Steve Blank’s words that Start-Ups can be defined as ‘temporary organisations in search of a repeatable and scalable business model’ makes so much intuitive and practical business sense in the context of NPD needing to take advantage of variability and asymmetric economic pay-off functions.
Variability is desirable when it increases economic value. This happens when the positive tail of a probability distribution extends far enough into a high payoff region to overcome the cost of the negative tail.
For those of you who might have studied finance and option theory would see the parallels between financial option payoffs and product development payoffs. Stock options have limited downside and unlimited upside. Under such conditions, maximising variability is key.
However product development has a slightly different payoff profile. NPD projects have unlimited downside and limited upside. NPD downside has no limit because we can invest unlimited time and expense when we fall short of on expercted product performance criteria. NPD upside is limited because once we have sufficient performance to create customer preference, incremental performance produces little additional economic profit.
Such economic payoff functions do not maximise payoffs by maximising variability. As variability increases, the left-hand tail extends deeper into the zone of increased losses meanwhile, our right-tail extends into the flat zone that produces little incremental benefit. We reach a point where further increases in variability actually diminish economic returns.
If you were to add a feature that increases product performance but is highly risky to implement and provides marginal performance gains then the high risk feature increases the spread of potential outcomes but the economic payoff changes very little. In such a context adding this feature will not increase economic value by adding the feature.
Maybe the key issues to address when a new feature or features are proposed: what is the cost and difficulty associated with implementing the feature/s, what economic pay-off can you expect from the feature/s and what evidence or information do you have that supports the development of this feature?
Not all features are directly monetisable but surely they should be connected to how the product provides value? Even in the context of Non-Functional Requirements (NFRs) which help to prevent bad things (i.e., risk management) from happening and having negative outcomes (i.e., lost revenue or increased costs) can be accounted for in such a framework.
In NPD, within certain bounds if you can make bets with limited downside risks and capped upside then variability can give you a positive expected pay-off.
We can further skew the odds in our favour if we take a systematic and structured approach to the innovation search process for either problem-solution fit, or product-market fit or and business model-fit. Sorry for being ‘fit’ mad.
If you consider start-ups that then have either iterated or pivoted to a new problem, product or business model, the core realisation is that they made decisions based on reviewing, analysing and acting on new information.
The key principle taking advantage of variability in NPD is how do I gain the maximum amount of information for the least cost in terms of time and resources which ultimately can be translated into a universal unit of account like money?
What is the value of variability?
A lot of the thinking that went into Lean Start-Up including MVPs and other associated spinoffs and tactics can be explained by insights from Donald G. Reinertsen.
His perspective is a significant shift from conventional product development thinking and has important implications for how organizations approach the design, management, and optimization of their product development processes.
Reinertsen's approach emphasizes the need to consider the economic implications of decisions rather than just following prescriptive best practices that are usually contextual to issues being dealt with.
In product development, variability is not just unavoidable but can be beneficial. Here's why:
Value of Information: In product development, every experiment, even if it "fails," provides valuable information. This information variability can lead to innovation and to a better end product if the correct insights and learnings are taken from the failures.
Economic Cost of Delay: By always aiming for a "perfect" solution and avoiding variability, teams might delay the release of products. This delay can have economic costs, sometimes greater than the costs of variability. Releasing a version of a product that enables a user to complete valuable unmet needs in a narrow focused way is smart way to enter the market.
Exploiting Positive Variability: Variability can also lead to unexpected positive outcomes, such as breakthrough innovations or serendipitous discoveries. How many products came about from unexpected experimental outcomes? This benefit of variability explains how experiment portfolios at R&D companies and innovation laboratories could benefit from variability.
Flexibility in Decision Making: By accepting variability, teams can maintain flexibility in their decisions, allowing them to adapt to new information or changing conditions. It is much easier to make changes to product concepts or ideas before they reach scaled production systems where the cost of change is a lot higher.
The below test and learn approaches are all linked by the common thread of new information arrival.
Sample overview of test and learn approaches that benefit from variability to an extent:
David Bland and Alex Osterwalder in Testing Business Ideas
Itamar Gilad in using the ICE Index score where information plays a critical role in creating weak or strong evidence in support or against an idea.
Jeff Gothelf and Josh Seiden in Lean UX specifically on Value and Risk Assumption Mapping.
Design Thinking in managing and mitigating risk across financial viability, technical feasibility and solution desirability which can further be decomposed into value risk and usability risk.
Is all testing equal in NPD?
If we parse the concepts from the above approaches then what you realise is that the way to benefit from variability is to take advantage of the information gain from tests or experiments.
From Reinertsen's perspective, product developers should distinguish between exploratory testing (i.e., Product Discovery), which should be optimised for information generation and validation testing (i.e., QA and Solution testing), which should be optimised for high success rates.
Given that we pay for tests with money we should be clear on the economic value created by a test, at the very least the economic value of a test should exceed the cost of the test.
Exploratory Testing
The objective function a NPD team is optimising against is really about maximising information gained for the least amount of time, resource and cost incurred for an exploratory test.
Seen in this light a testing approach that seeks to gain information through incremental and iterative investments will most likely succeed in finding problem-solution, product-market or business model fit.
So where does this leave frameworks like jobs to be done theory? If anything the cost of a formal jobs to be done study (which from my point of view is a rigorous exploratory testing approach) is a small price to be paid relative to the information gained about unmet customer or end-user needs and their relative importance.
Validation Testing
If a product development team is running a validation test i.e., determining the failure rate of a component or solution then really the team is optimising for high success rates. Does your solution work and perform as expected with minimal failure rates?
So what is an apt metaphor on how to leverage variability in NPD?
In the intricate dance of product development, there exists a nuanced understanding of process and innovation—one that challenges traditional paradigms and paves the way for ground-breaking products.
One of the best metaphors I can think of to capture this essence, is the analogy of a chef versus a cook which offers a delightful perspective that paints the picture vividly. There are principles and fundamentals of food and cooking that a chef relies on to produce new recipes or dishes whereas most home cooks will follow those recipes without necessarily having a deep understanding of the principles informing flavour, and taste etc.
“Product development creates economic value by producing the recipes for products, information, not by creating physical products. If we create the same recipe twice, we’ve created no new information, and consequently , no economic value. If we wish to create value, it is necessary, but not sufficient, to change the design. But changing the design introduces uncertainty in outcomes” – Donald G. Reinertsen, The Principles of Product Development Flow – Second Generation Lean Product Development
The Art of Culinary Creation - a useful metaphor for NPD
When you step into a gourmet kitchen, you might find a chef experimenting with flavours, blending the unconventional, and taking calculated risks. This approach to food, marked by creativity and innovation, closely mirrors the approach required for successful product development.
A chef, much like an innovative product developer, is not bound by recipes but is inspired by them. They rely on foundational knowledge, but also on their intuition, experience, and the quality of their ingredients. Sometimes, the most delectable dishes arise from unplanned combinations, a dash of serendipity, or a sudden burst of inspiration. In the realm of product development, this is akin to a novel idea or an unexpected solution to a persistent problem, emerging from embracing variability.
On the other hand, a cook typically follows a set recipe. Their primary goal is consistency. While there is undeniable value in producing a reliable result, especially in contexts like manufacturing, this approach might stifle innovation when transferred to product development. The cook's recipe-driven methodology echoes the traditional mindset of many product developers: avoid variability, follow established protocols, and aim for predictability.
Balancing Flavours and Features
One of the most fundamental principles in creating a new dish is the art of balancing flavours. From the sweetness of sugars and the bitterness of certain greens to the umami from broths and meats, a chef knows the importance of harmonizing these elements. Similarly, in product development, there's a need to balance various features, ensuring that no one aspect overshadows another, thereby delivering a holistic user experience.
Moreover, beyond just taste, texture, aroma, and presentation play pivotal roles in culinary creation. Analogously, in product development, the user interface, ease of use, aesthetic appeal, and product reliability are crucial components that need harmonization.
The Value of Testing and Iteration
A signature dish doesn't become a hit overnight. Chefs experiment, taste, adjust, and re-test, refining their creations based on feedback and intuition. This iterative process is mirrored in product development where prototypes undergo multiple evaluations, user testing, and refinements. Just as a chef would adjust seasoning or cooking time, a product developer tweaks design elements or functionalities to perfect the end product.
Embracing the Unexpected
Perhaps the most striking similarity between chefs and innovative product developers is their attitude toward the unexpected. A chef might discover a delightful flavour combination accidentally or find that an "error" leads to a unique texture. Similarly, in product development, unexpected challenges or results can lead to breakthrough innovations. Embracing variability allows for such serendipitous discoveries.
Drawing from Tradition and Innovation
While chefs are known to experiment, they also deeply respect and draw inspiration from traditional flavours and techniques. In product development, innovation doesn't mean disregarding established practices. It's about leveraging foundational knowledge while being open to new methodologies and ideas. The chef and cook analogy beautifully encapsulates this balance. While the chef embodies innovation and the art of possibility, the cook represents the value of consistency and reliability. Both have their place in the culinary and product development worlds.
Conclusion
Donald G. Reinertsen's insights into embracing variability in product development, as contrasted with traditional lean manufacturing principles, can be beautifully illustrated with the chef and cook analogy. Just as the culinary world benefits from both the consistent reliability of the cook and the innovative flair of the chef, product development requires a harmonious blend of established protocols and the courage to venture into the uncharted.
By embracing the chef's mindset, product developers can harness the potential of variability, leading to products that not only meet market needs but also surprise and delight in their novelty.
It's a perspective that celebrates the unexpected, values the process of iteration, and, above all, champions the spirit of innovation.
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