The figure to the right illustrates the principles of product development and especially new product development.
We start off in the upper left corner. Initially "everything is possible", there is no frozen design. Information is very large and the task can be both complicated and complex.
Since product development is very much a learning process and we don't know from the outset what ways we will later come to choose and what solutions and problems will be discovered, it is impossible to make detailed plans from the start or a detailed organization of work. Product development is a process where you draw the map as you go.
From these reasons the development of new products must take place in projects to be efficient. Only the project form posses the necessary flexibility and allow for the unconventional methods that might be necessary.
Many companies struggle with product development in the line organization, or have their developers participate in several projects simultaneously - both equally problematic.
Dynamic concepts are made static by finding solutions and deciding how functions shall be realized. It is like making a sculpture out of a block of marble, which in itself contains an unlimited number of possibilities. You remove marble, thereby reducing the number of possibilities by every chip until eventually the desired statue have been created. This is from an information technology point of view equivalent to substantially reduce information.
We understand that as we move nearer to the finished product a number of risks have disappeared - it is becoming ever more probable that we shall succeed. The closer we get to the finish, the more uncertainty is reduced in the project.
The goal is to determine in minute detail what the new product shall look like (geometry, material, tolerances, surface treatment, color, scent, etc), manufacturing, logistics and the design of package material, as well as manuals and sales promotions, etc.
When this unique description is in place and implemented in the company processes, in the line organization, then product development is finished in the way that now production and sales of the new product take over and drive the product business. Especially the production process is very static where every produced detail must be identical to every other detail of the same sort.
Concepts are now static and the line organization, so governed by structure, by rules and regulations, has taken over the product from the visions- and knowledge governed project.
All humans differ. Some of us are happy in the free environment at the beginning of a development project, while others become anxious faced with all uncertainty. They crave rigid rules and routines and find security in the rules and structure of the line organization, where instead the project minded and entrepreneurial personalities feel anxiety or become bored.
We have in product development to opposites. And this is unfortunate. There are group psychologists that say that anxiety reduction is the single most important factor for understanding human behavior. Unfortunately the very group norms that are anxiety reducing may also be detrimental to efficiency and work performance, and vice versa.
We start from the previous description of the product development process.
Number of personnel is small in the beginning, but very special.
Those that take part should be creative, knowledgeable, and comfortable with the great uncertainty and the large changes in the beginning. As the concept is made more static and lands in the production- and product improving processes of the line organization there is a demand for more people than at the start. The demand on them is also different.
Since few are involved at the beginning and the work (simulations, modeling, etc) involves computers and simple mock ups, cost is low although the people involved are very qualified.
It is good practice to let the concept developing people from the beginning of the project stay on in leading positions during the rest of the project. Thereby guarantying that finesses of concept solutions are not meddled with and lost and that the necessary adjustments that always have to be done are of the highest class.
The possibility to influence the product is large in the beginning. It is now decided what methods and solutions will be used. In the beginning everything is possible. When the number of personnel starts to increase closer to the end of the project about 70% or more of the cost is already committed due to concepts chosen.
Skilled purchasers can later, as the product is in production, only marginally influence costs. It is thus very important that the right persons are engaged from the start so that the right decisions are made.
From an information theoretical point of view new product development can be seen as a reduction of uncertainty. From a multitude of possibilities, we shall choose one. This can be seen as a reduction of information. This is a view that is helpful in risk management.
The cost for changing the product is small in the beginning but large nearer the end. The exact form of t he curve is unknown and besides, it naturally varies from product to product.
It is clear, however, that the connection is nonlinear and strongly progressive.
Yet again a reason for handling the project with greate care already from the outset