PLM A-C-T-I-O-N: A Strategic Framework for Delivering Continuous Product Innovation
By David Burdick

For the last 10 years, the world of product development and its associated technologies has undergone a period of stagnation. Other than a minor up tick with the move towards distributed systems and Internet technologies, few development organizations have experienced the dramatic gains in productivity and competitiveness that vendors in the industry have long touted. The primary reason for this failure is that most technologies and strategies have been too narrowly focused on providing better task automation tools and capabilities for the engineer. The broader problem which must be addressed is how corporations can develop and deliver continuous innovation that can be manifested in great products that customers want to buy over and over again. This problem is obviously much broader in scope and requires a complete re-think about the processes and technology framework required. Product Lifecycle Management (PLM) is a business IT strategy that is focused on addressing the "big picture" problem of developing and delivering innovative products on a continuous basis. PLM A-C-T-I-O-N is a strategic framework for architecting and implementing a PLM strategy. It encompasses 6 major imperatives that serve as the strategic cornerstones for constructing a PLM plan which are: Alignment of the IT investment strategy, Collaboration, Technology, Innovation, Lifecycle Opportunity and Intellectual Property.

Imperative #1: Alignment
Businesses must Re-Align IT initiatives against the primary challenges of enhancing top-line revenues and reducing direct product costs versus the historical focus of improving operational efficiencies

During the last 5 years, businesses have invested enormous sums of money and human resources into initiatives aimed at improving operational efficiencies and productivity. While significant improvement has been made in lowering costs (primarily indirect costs), operational efficiency and productivity are not the key challenges facing business today. Instead, finding ways to increase revenues and reducing direct costs are the main business challenges. However, there is a huge disconnect in the amount and focus of IT spending today and its linkage with the key business issues. Almost 80 percent of IT spending in durable goods industries are targeted at lowering indirect costs (e.g. order management, inventory management, supply chain management, etc). Only 20 percent of spending is targeted at the most pressing issues of revenue enhancement and direct cost control. Much of this dilemma is due to the mistaken idea that operational systems such as ERP, SCM and CRM can positively impact the revenue and direct cost areas. In most cases, this is a false premise. The only major business system that can significantly improve revenues and direct cost is PLM which fundamentally addresses the real source of revenues and direct costs - namely how effectively winning products are developed on a continuous basis. The most efficient operational systems in the world will make no difference to revenues and direct cost if the products being developed are not competitive.

Imperative #2: Collaboration
A commitment to deep, collaborative relationships with innovative suppliers is far more beneficial than superficial supplier involvement programs

Despite the massive failures of the "dot.bomb" era, one of the beneficial aspects and residual outcomes has been the use of the Internet as a catalyst to awaken companies to the extraordinary benefits of closer involvement and collaboration with its suppliers. This aspect of E-Business has initially yielded some very positive results, however most companies still have a long way to go while some are on a disastrous path that could ultimately squander the opportunity. Most companies today have implemented "Supplier Involvement" programs aimed at reducing the number of suppliers to negotiate volume purchase agreements, and institute electronic EDI exchanges of invoices and purchase orders. This kind of a supplier involvement strategy does nothing to impact top-line revenues and in some ways can hurt this effort by reducing the number of great minds inside the supplier base that can be utilized. What companies should really strive for is a strategy of "Supplier Collaboration" where insights, ideas and knowledge are exchanged with the goal of building more highly innovative and differentiated products. Under this strategy, companies should try to increase (not decrease) the number of innovative suppliers. The collaboration focus should shift from exchanging P.O.'s and invoices to erecting virtual collaboration systems where the extended supply chain can work together more effectively and seamlessly to build more innovative products

Imperative #3: Innovation
Companies must reformulate their product strategies to generate greater customer-driven and paradigm shifting innovations

"Innovate or Die" is a common mantra espoused by companies who rightly understand that innovation is the key to building a winning product development strategy. However it is important to target the right classes of innovation. Most product development programs and dollars are overly weighted towards small, incremental innovations (Linear Innovation). Numerous studies on the leading corporate innovators (e.g. Sony, 3M, and Nokia) have shown that these companies take greater risks and target more of their product development resources towards higher degrees of innovation (e.g. Customer-Driven and Paradigm-Shifting Innovation). The ideal product development resource weighting should emphasize paradigm-shifting and customer-driven innovation since these two classes of innovation can deliver much higher and more durable returns.

Linear Innovation - The ability to develop and introduce standard products or product family additions that meet or exceed the industry average cycle-time and incorporate innovations that follow the industry's standard technology curve (example microprocessors, DRAM's). This is a "keeping up with the Jones's" strategy and generally does not produce durable returns.

Customer Driven Innovation - The ability to dynamically recombine, modify, or tailor parts and assemblies into new or custom products based on customer demands (example: personal computers, bicycles, athletic shoes). This is the fastest growing class of innovation enhanced by the use of web portal technologies to assist customers in specifying and designing their own products.

Paradigm-Shifting Innovation - The ability to develop and introduce breakthrough or "category-killer" products that appeal to entirely new user markets or dramatically expand existing market opportunities (example: Chrysler Mini-Van, Sony Playstation)

Imperative #4: Intellectual Property
The collective product intellectual property of the corporation must be treated and managed as a vital corporate asset

Most large companies have spent years and millions of dollars constructing asset management systems for their financial, inventory and capital needs. However, few companies have treated their Intellectual Property with the same strategic zeal. Of the major corporate assets that exist in a product oriented company, none is more important than their accumulated wisdom and know-how. Yet these knowledge assets are so dispersed among many systems and processes that it becomes very difficult for companies to access and leverage the many potential breakthrough ideas that are embodied in their own reservoir of Intellectual Capital. Some industries however, particularly in the pharmaceutical area, treat their Intellectual Property as real strategic weapon and have system philosophies which reflect this thinking. Many major breakthrough drugs for example, were discovered by mining the existing knowledge that exists within their Intellectual Property Asset Management systems. Viagra was discovered by a team of researchers who uncovered and leveraged discoveries in treating high-blood pressure. By aggregating the accumulated know-how into a PLM repository and making it easily accessible and leverageable by all knowledge workers, the potential for breakthrough discoveries and innovations can increase dramatically.

Imperative #5: Technology
A PLM system is not the sum of legacy CAD/CAM/CAE/PDM technologies … it's a set of guiding principles against which technologies are applied

The proper way to position and think about PLM is in the context of its role as a closed-loop Intellectual Property (IP) Ecosystem for the enterprise. Here PLM encompasses transforming ideas to profits on the outbound process path (PLM Pipeline) and in turn, captures customer experiences which lead to new ideas on the return, inbound process path (IP Asset Management). Along the way, IP undergoes a number of important transformations (e.g. ideas to concepts, concepts to prototypes, prototypes to products, etc) and interacts with other operation systems such as ERP, SCM and CRM. A PLM system provides a rich framework that allows all systems and users to easily interact with the enterprises' IP in order to add value. Unlike transaction-oriented operational systems, PLM systems are uniquely architected to serve as the IP ecosystem because their inherit technologies and data structures can effectively deal with all the required IP abstraction levels (e.g. ideas, concepts, components, assemblies, products, BOM's, process models, etc) and provides an excellent way to aggregate IP to be leveraged as an asset.

When constructing a PLM system, the selection of vendors and technologies should be judged against their ability to conform to a set of guiding principles. The six key guiding technology principles for PLM are:

1. The underlying robustness and openness of the data created is more important than functional features
2. Modeling technologies are constantly evolving and users will normally require multiple approaches to fully author product designs
3. Physical testing and prototyping will never be completely replaced by digital methods, however, the intelligent blending of physical and digital testing can reduce the number of physical prototypes
4. The exchange of insights, ideas and knowledge with suppliers is more critical to successful collaboration than the exchange of CAD files
5. Allowing users to quickly access and leverage product knowledge in their own context is more important than adherence to rigid PDM data and process models
6. Generic PLM technologies and implementation will only deliver linear innovation benefits. Infusing the system and applications with unique knowledge is the only way to gain higher levels of competitive advantage

Imperative #6: Opportunity
Architecting and implementing a durable, best-in-class product development strategy requires continuous, systemic improvement which collectively addresses all engineering disciplines and new opportunities across the entire product lifecycle -- there are no quick fixes

During the next five years, virtually every product developed will contain a mixture of mechanical, electrical/electronic, and software technologies. Historically, the technology and process strategies with respect to each of the three major engineering disciplines have evolved in isolation from one another with very little time and effort devoted to bridging and integrating these areas together. A successful product development strategy requires that all aspects of the product lifecycle are fully addressed - from the early concept/discovery stage through marketing and maintenance, across all of the three major engineering disciplines. The piecemeal, quick-fix approaches of the past that focused technology and process re-engineering efforts on small portions of the development chain will no longer work Instead, companies must begin adopting a much more systemic, big picture approach where each of the three major engineering disciplines begin evolving their technologies, processes and capabilities together. Additionally, PLM can aid the creation of new opportunity areas along the product lifecycle. Embedding configuration management systems in smart products (e.g. Aerospace, Shipbuilding), constructing customer-driven design portals, and developing high-value service after sales systems for maintenance technicians are all new and fertile areas of opportunity where PLM can play a major role

About Collaborative Visions
Collaborative Visions, Inc. was formed in 2001 to provide insight, analysis and consulting to users and vendors in the emerging area of Product Lifecycle Management (PLM). Its primary mission is to help clients maximize and accelerate initiatives aimed at exploiting PLM opportunities. Visit their website at: http://www.collaborativevisions.com/

About The Author Mr. David Burdick is the Founder and President of Collaborative Visions, Inc where he leads all research and consulting activities in the areas of Product Lifecycle Management. He has more than 20 years of experience in engineering and manufacturing information technologies and is widely recognized as a leading authority in the emerging field of PLM. He can be contacted at: dburdick@collaborativevisions.com.

Prior to founding Collaborative Visions, Mr. Burdick served as a Vice President for Gartner Group's Manufacturing Applications Strategies Service covering C-Commerce, PLM, CAD/CAM/CAE and PDM markets and technologies since 1992.

Prior to joining Gartner Group, Mr. Burdick spent eight years at Dataquest where he served as Vice President of Technology Analysis overseeing the activities of all U.S.-based research analysts in the areas of semiconductors, peripherals, computers, telecommunications and software. During his tenure at Dataquest, Mr. Burdick developed, launched and served as the lead analyst for a number of high technology research services including CAD/CAM and workstations.

Prior to his tenure at Dataquest, Mr. Burdick was a Senior Systems Engineer for Auto-trol Technology where he served as a key technical consultant for the development, marketing and installation of CAD/CAM/CAE systems. Before Auto-trol, Mr. Burdick was a Design Engineer for International Harvester where he assisted in the design and implementation of large-scale CIM systems.

Mr. Burdick has a Bachelor of Science degree in mechanical engineering from Bradley University and has completed graduate course work toward a master's degree in electrical engineering at the University of Illinois.