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Lean Product Development: Definition & Principles

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  • 0:04 Lean Organizations
  • 0:58 Lean Product Development
  • 1:57 Key Principles
  • 4:20 Lesson Summary
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Lesson Transcript
Instructor
Natalie Boyd

Natalie is a teacher and holds an MA in English Education and is in progress on her PhD in psychology.

Expert Contributor
Steven Scalia

Steven completed a Graduate Degree is Chartered Accountancy at Concordia University. He has performed as Teacher's Assistant and Assistant Lecturer in University.

Lean business is usually thought of as being about lean production. However, that's not the only way a company can reduce waste and save money. In this lesson, we'll examine lean product development.

Lean Organizations

Jorge owns a software design company. He wants to create useful and simple-to-use apps for people, but there's a problem. It seems to take a long time to create one app. And the longer it takes to create an app, the more money it costs the company.

Jorge might want to think about making his company lean. Lean businesses focus on reducing waste and extra costs. Usually, lean is thought of as being part of production. That is, companies who manufacture products as they're ordered, so they don't have any wasteful and expensive inventory lying around are engaging in lean production.

However, Jorge's company makes digital products, so they don't have a bunch of inventory lying around. But his company can still be lean. That's because the basic principles of lean organizations can be applied to product development as well as to production. To help Jorge out, let's take a look at lean product development and its key principles.

Lean Product Development

Jorge's company doesn't manufacture physical products, but that doesn't mean they can't be lean. Lean product development involves reducing time and waste in the product development process.

Traditionally, product development takes a long time and costs a lot of money. There are multiple iterations of a product and lots of research done at every stage with no guaranteed payoff. A company starts with an idea, produces a prototype, does market research to get feedback, changes the prototype, does more research, and so on. That's a lot of time and money!

This is essentially how Jorge has been doing his product development. He comes up with an idea, has his team develop a prototype app, then does market research and revises the app. Sometimes, he goes through months of product development only to find that there's no real market for his new app. In lean product development, though, Jorge will streamline the process to go faster and cost less while creating an app that's valued by customers.

Key Principles

In order to do all that, Jorge needs to understand the key principles of lean product development. Knowing these will help guide Jorge in his quest to make his company lean.

The first guiding principle of lean product development is that the company should create value for the customer. This means that product development usually begins with research on what customers need. Those needs then become product specifications. For example, instead of starting with an idea for an app, Jorge might start with some research. Through that research, he discovers that many people need an app that automatically takes their to-do list and integrates it with their calendar, scheduling time to get each to-do item done.

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Additional Activities

Lean Product Development - A Practical Exercise:

The following exercise is designed to help students apply their knowledge of lean product development in a real-life business context.

Scenario

Although Toyota Motors Co ("Toyota") is known for its lean production models, the company has extended this philosophy to the development of products, namely car models for consumers. Below is a sample of key activities that Toyota performs when developing its new vehicles. Each activity is associated with one of the four key principles of lean product development.

1. Toyota wants its cars to be perceived as reliable, long-term investments. As a result, it conducts the same performance tests on its used cars than it does for its new cars. This ensures that the company's cars continue to perform as expected, even after years of use.

2. Toyota spends extensive resources on gathering customer information on their preferences and needs. For instance, it sends out surveys to dealerships around the world to ask potential customers what they like or does not like in Toyota's models. Toyota plans to implement the top suggestions in their next model.

3. When Toyota receives feedback from all of its customers, instead of investigating each piece of feedback individually, it uses computer software to amalgamate and summarize the results so that Toyota can take quick action to respond to the most requested features or changes.

4. Toyota reconfigured its headquarter office to provide the best work environment for its teams: The design team has a large, open space with 3D printers and modeling software, whereas the marketing department has large conference-style rooms with ample whiteboard space and great audio/visual simulators.

Required

For each of the above activities, determine the corresponding key principle of lean product development. The choices include:

  1. Creating customer value,
  2. Streamline development,
  3. Empowering employees, and
  4. Continuous Review.

Solution

ActivityPrinciple
1Continuous Review
2Creating customer value
3Streamline development
4Empowering employees

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