TVP – Metric 6 Development Cycle Time

Resource Type
Tool
Authors
Alan Fusfeld, Innovation Research Interchange
Topics
Innovation Metrics, Stage-Gate, Tools and Techniques
Associated Event
Publication

Background | User Guide | Program Contents | Stakeholders | List of Metrics

1. Metric Definition

The elapsed time from either identification of a customer product need or the establishment of a discrete project until commercial sales commence.

a. Market Cycle Time

The elapsed time from identification of a customer product need until commercial sales commence.

b. Project Management Cycle Time

The elapsed time from establishment of a discrete project to address an identified customer product need until commercial sales commence.

For both market cycle time and project management cycle time, the end point can be defined as the time when manufacturing feasibility is established in the event that the project is cancelled. This metric can be used to track ongoing performance and the improvement in cycle time within an organization, or by comparing to industry benchmarks. Some organizations may find that grouping projects by category (e.g. major new product, minor product variation) can provide a better measure by making the comparisons more precise and accounting for the inherent differences in risk and complexity between these different types of projects.  Other organizations evaluate cycle time for each stage of their stage/gate process to improve cycle time and also to identify what phase or phases of projects typically result in the greatest delay.  This information provides the organization with an opportunity to directly address these issues.

2. Advantages and Limitations

The advantages of this measure are that it is quantitative and can be used to measure the entire process or various parts of the process if a stage/gates process is in place. This metric can be used to determine what stages or project activities are driving the overall cycle time so that improvements to the process can be made.  It is also well accepted that speed to market can create significant competitive advantage.  This metric does allow the company to focus on this strategic priority and typically results in improvement.

A key limitation of this metric is that it does not address project quality, either in terms of the selection process for new projects or in terms of post start-up issues.  By focusing only on this metric, these types of problems can actually be increased as the team is under pressure to meet cycle time metrics.  This metric is best enabled by a stage/gate or similar project management process, so that the cycle time can be easily recorded and maintained.

3. How to use the metric

Both metrics should preferably be used in combination with a project reporting system that can track the project initiation date, based on approval and assignment of resources; the length of time in each stage of the innovation process; and date of sales commencement. For the first metric, the initiation date could be the date the customer need was determined (i.e. marketing request or date of customer research results). Cycle times for different types of projects (new products, cost savings, product improvements, etc.) should be compared to help predict and manage resource allocation. Cycle times for different divisions could also be compared  to identify practices driving lower cycle time to adapt where possible.

4. Options and Variations

This metric may be modified by evaluating cycle times for only those parts of the process for which R&D feels it has most control or influence. Cycle time could be extended past the commencement of sales based on what is important to the organization and R&D’s involvement, i.e. when target efficiency is achieved, target manufacturing cost, and percent of product within specification.

5. Champions and Contacts

6. References

The first three references state the case for faster R&D response time, while the last three references raise cautions about going too fast:
Burkart, R. E. 1994. Reducing R&D Cycle Time, Research-Technology Management, 37(3), pp. 27-32.
Patterson, M.L. 1993. Accelerating Innovation: Improving the Process of Product Development, New York: Van Nostrand Reinhold.
Smith, P.G., and Reinertsen, D.G. 1992. Shortening the Product Development Cycle, Research-Technology Management, 35(3), pp. 44-49.
Curtis, C.C. 1994. Nonfinancial Performance Measures in New Product Development, Journal of Cost Management, 8(3), pp.18-26.
Von Braun, C.F. 1990. The Acceleration Trap, Sloan Management Review. 32(1), pp. 49-58.
Ellis, L.W., and Curtis, C.C. 1995. Speedy R&D: How Beneficial? Research-Technology Management, 38(4), pp. 42-51. This article calls market cycle time “idea-to-customer time,” and defines other times.