[MUSIC] This lecture will focus on portfolio management, specifically on the selection of new product development projects for implementation. This process is part of portfolio management, and it is performed during the initiation of front end phase, before the project starts. This early analysis is part of the fuzzy front end planning. It is fuzzy, and the levels of uncertainty at this phase are very high. And it is the front end of the project, as the project did not start yet. The fuzzy front end phase starts with ideas for the development of new products, services, or processes and ends with the go/no-go decision for each idea. A go decision initiates a new product development project, while a no-go decision means that the project may be initiated later or may be rejected altogether. The fuzzy front end is performed before the project starts to screen ideas and to test them in order to decide on which new product development project to approve. During the fuzzy front end of new product development, the organization formulates a concept of the product, service or new business idea to be developed, and decides whether or not to invest resources in the further development of an idea. The fuzzy front end is performed before the project starts and therefore, there are typically knowledge gaps in high levels of uncertainty. Thus, there is a need to collect data and to process it into information that can support the decision making process. The best way to collect the required information is to assemble a multifunctional team who is representatives of all the parties that have relevant information. Such as engineers who know the technology, marketing experts who understand the market. And people in logistics and production who understand the processes of acquiring and handling materials and parts, manufacturing the product, and distributing it. Typically, these are experts from different parts of the organization, and sometimes the help of people from other organizations may be needed such as the customers, the suppliers, etc. It is important to bring experts from different functions together to get the whole picture as early as possible. Based on chapter Four of the book Innovation and Internship, Creating New Value first edition by Danny Sampson and Mary Lloyd, the funneling issue should be discussed when evaluating ideas for new product development project. One, what is the value proposition of the proposed product? Two, what is the marketing plan? Three, is it possible to scale up? Four, is there a leadership team? Five, is there a problem or intellectual property? Can IP be protected? Six, what is the financial return on investment? Seven, what is the impact on corporate social responsibility? Eight, how does it fit with organizational strategy? A good example of a well-structured fuzzy front-end process is the process developed by Toyota and described in a book entitled Toyota Product Development System, in which chapter four is developed as a front-end of new product development projects at Toyota. The methodology developed by Toyota is supported by organizational culture, tools and techniques. And most important, it is supported by Toyota's top management. In the Toyota front-end methodology, the focus is on cross-functional teams that invest time and effort to collect as much information as possible As early as possible and to evaluate many different alternatives for new products. The team used concurrent engineering approach which means that for every alternative, the team tries to evaluate not only the performances of the product, but also its manufacture ability, supportability, serviceability, etc. In other words, the team discusses the eight issues that should be discussed when evaluating ideas for new product development projects. This is done very early in the product life cycle. Taking advantage of the fact that flexibility is a high and the cost of change is very low. And taking into account the uncertainty that tends to be high. The concept of front-end planning in practicing industry like construction industry. The Construction Industry is Institute conducted research that shows how properly done front-end planning Can reduce the average cost of a project by about 10%, it's average duration by about 7% and the average number of changes by about 5%. In New Product Development projects, the impact of front-end planning is probably higher, as the level of uncertainty is higher. In new product development projects, front-end planning is the point where go-no-go decisions are made and new ideas for new product development projects are evaluated, approved or reject, and, therefore, the decisions made during the front-end planning phase are very important. Front end planning needs well defined start, and end points. In most organizations it begins with initial search for new opportunities, through the formation of a germ of an idea, and continues in the developement of a precise concept. The fuzzy front end concludes in most organizations when organization approves and begins formal development of the concept, or reject the proposed idea. To succeed in the front end planning process, the organization has to define the activities to be performed, how these activities should be done, what tools or techniques should be used to support these activities, who will do each activity, and when? A well designed front end planning process is important, because it is the gate where decisions are made regarding future projects of the organization. The design of the front end process focuses on the selection of specific projects for execution and the selection of specific alternatives for each selected project. Many alternatives may be considered. Some are technological alternatives, selecting the most effective or the least expensive technology for the new product. And some operation alternatives are selecting the most efficient resource combination of a combination of resources that are ideally available to perform the project. Resources include people, machines, major suppliers and major subcontractors. The selection of alternatives must take into account the value each alternative generates, the cost of adopting it, the time it will take, and the risk involved. Tradeoff between all these factors is important. because typically, developing a product with medical pharmacists means more time, higher costs, and higher risk. The selection of projects must also take into account the eight tests mentioned earlier. Including the alignment with the teaching goals of the organization and the way each project advances these goals. Unlike the construction industry, the developed guidelines for front end planning. In the area of new product development, there are no industry-wide guidelines, or even recommendations. In many organizations, there is no methodology, and it is not clear what to do during the front end and how to do it. The big problem is that the project is not yet initiated. No project manager is appointed and the project team is not yet formed. The result is a wide range of approaches that are implemented by different organizations or even in the same organization by different people. In some organizations, the front end planning is done by the portfolio management team or by the project management office, while in other organization, ad hoc teams are formed to test new ideas. In most cases, there are no special tools to support the process and simple text files, presentations or Excel spreadsheets are used. Because it is impossible to look at all the technological and operational alternatives without process based project methodology and proper tools. The result is frequently scope creep associated with higher project costs, poor quality, multiple changes and longer project duration. The front end process ends with a decision about what ideas to develop by initiating new product development projects, and how to do it by selecting the best technological and operational alternatives. The selected projects are added to the portfolio of projects, and the selected alternatives form was is known as a configuration baseline of the new project. Where configuration means the physical and functional characteristics of the product, process or service. [MUSIC]
