This month's newsletter is highly personal to me because it goes to the heart of why my entire career has been spent working to continuously get better at product development. I believe that most of our corporations depend on new products to enable their ability to exist and to grow. I believe that new product development is a key reason for continuing employment and new hiring within our businesses - THE major theme of our 2012 presidential election. I choose to be a product development consultant because I love what I do and I hate seeing people laid off. Last week, Eastman Kodak, my former employer for nearly 20 years, announced it would close its consumer inkjet printer business. This announcement came after they had previously said it was the bright spot in the portfolio to see Kodak emerge from Chapter 11 bankruptcy at the end of this year. What has happened at Kodak and what are some lessons it has for all of us in the profession of product development?

Kodak on the Downside

In 1982, when I began working in Office Imaging (also called Copy Products) R&D at Kodak, there were over 60,000 people working for Kodak in Rochester, NY. Today, 30 years later, there are less than 5,000. That means over 55,000 people have lost their jobs. Kodak has systematically failed to identify and execute on a sustainable plan of new product development to replace the dying technology centered on silver-halide film and the photographic product portfolio that surrounded it. Pretty much every product segment and marketing strategy they have invested in has failed, with one notable exception of Eastman Chemical in Tennessee.

Robust Design Capabilities Ignored

Kodak CEO George Fisher was brought in from Motorola in mid-1990 to turn Kodak around. George steered Kodak away from a "Bugs and Drugs" (biotechnologies, pharmaceuticals, consumer health and cleaning products) diversification strategy and back to its core competencies in digital imaging. George was also a great advocate for Robust Design; he wrote the foreword to my book, Engineering Methods for Robust Product Design! Unfortunately, his successors largely ignored this key enabler to developing reliable products.

Missed Opportunity: Digital Camera Technology

Kodak invented the digital camera in the late 70's (see this video interview of its inventor, Steve Sasson). Many licenses were sold to use Kodak IP in many of the digital cameras that are on the market today. In my opinion, Eastman Kodak should have become the world leader in cell phone camera technology. Apple made a similar transition; Kodak could have easily done it as well. Kodak missed that opportunity as the long-time, household name brand most associated with taking, displaying and manipulating pictures.

Kodak's Errors in Product Development

What happened? There were many mistakes over the last 30 years, but here is my opinion of what went wrong for Kodak's product development:

1. A consistent habit of rushing new products to market before they are ready. Time after time Kodak management did a poor job of enabling their development teams to do things right the first time during product development so that their new products were reliable out of the box. You can't gain market share in a highly competitive desk-top inkjet market with an unreliable product. It doesn't matter how cheap the ink is if you can't get the printer to work. Oh, and one more thing.... you can't issue software patches to fix hardware that is not robust to the sources of variation on which software has no bearing.
2. Commercializing the wrong product portfolio. Kodak systematically dismantled a diversified product portfolio that exploited their core competencies in chemicals and material science into products that could use their film, paper and materials development and manufacturing skill sets. By contrast, take a look at what 3M and Fuji have done over the same period of time.
3. Failing to exploit the digital camera technology that was first invented at Kodak. They benefited from their patent portfolio by licensing and selling IP to the companies that went on to do what they should have done. Imagine Kodak as the maker and marketer of the iPhone! Hindsight is 20-20, but it is not inconceivable that Kodak could have bought Apple and made Jobs the CEO! It's fun to dream...

Time-to-Market Trumps All

I could go on and on, but I want to focus in on the first and worst problem Kodak had in new product development: rushing products to market. The following statements are a sample of the kind of thinking at Kodak, as told to me by personal friends who have recently been working there. These statements have several hallmarks that Kodak's managers depend on - all of which are simply not true.

1. Get the product out as fast as possible then clean up the mess as you move forward - just get it out there! Our customer support team can save the day!
2. Taking the time to design and follow a project schedule that helps assure that the right kind of engineering tasks are done right the first time is damaging to the cash flow from the business case. Time-to-market is more important to the business case than reliability is.
3. Practicing Critical Parameter Development & Management (CPD&M) is antithetical to Lean Thinking! It will slow us down! (Proactive CPD&M is non-value adding in their narrow view of driving the schedule to minimize development cycle-time, thus taking us back to the principle that rushing and cutting corners is OK).
4. Proactive, preventive action takes too long and will again slow us down. Our Lean Six Sigma people will fix the problems efficiently later when we know what they are. (Instead, reacting to problems and fire-fighting are core skills).

Kodak set up a reward program for its managers that emphasized rapid time-to-market based upon irrational launch dates that had no basis in customer preference or satisfaction. It's as if Kodak expected their customers to say something like this: "Please provide unreliable products that will continually fail to perform as promised in the sales and advertising literature and promotions. We are fine with products that do not work properly and will patiently work with your customer support call centers until the product is fixed. We will remain loyal to your brand because you get products to market fast even though they lack the quality and reliability that your competition provides". Think about this situation; to financially incent your product development and manufacturing managers and directors to rush products to market, you would have to believe the ludicrous customer statement above. Instead, the cost of this kind of product development is tallied in part by the loss of over 55,000 jobs. In today's political environment you would not be surprised to hear someone say "There ought to be a law about this!" Perhaps we need a speed limit on product development!

Lessons for Your Own PD Processes

Product development process management and execution is self-policing. There are Project Gate Reviews, Technical Design Reviews and Peer Reviews within the development team itself. As product development professionals, we must rise to a higher standard of excellence, poise, pace and timing. Rushing products into a highly competitive market, as one local financial analyst noted here in Rochester, "is a fool's folly". It is too late to turn Kodak around. They have just conceded failure in a business (inkjet printers) that had previously been promoted as the "bright future of Kodak's emergence from Chapter 11". A major contributor to this failure was poor reliability due to improper product and process development.