Shop for Bargains in the Fuzzy Front-End

There is one universal truth none of us can argue with – Time is an irreplaceable resource. Especially when it comes to Product Development, development time wasted can never be recovered. Every week or month that your new product introduction is delayed comes with a quantifiable cost – whether it is lost revenue, or missed opportunity to a competitor. So, where is the best place to look for ways to shorten development cycle-time? When is the cost of cycle-time usually cheaper than the cost of delay? You guessed it – the Fuzzy Front-End. The fuzzy front-end is where you go bargain shopping for ways to reduce development cycle-time.

What is “Fuzzy” Front-end?

The “Fuzzy front-end” of Product Development is the zone between when an opportunity or idea for a new product becomes visible, and when we begin to seriously assign resources and work on developing that opportunity. It is “fuzzy” because a fog of self-doubt and uncertainty surround the front-end activities of new product development, especially activities surrounding the selection of the emerging opportunity.

Sometimes, you have a collection of trend data, but it doesn’t indicate a clear path ahead. Other times, your research may point clearly to a new idea, but you’re not sure if this is the right path for your business. Whatever the case may be, the point is – don’t converge on the new opportunity prematurely, without first doing some fuzzy exploration – collecting customer insights or going to the Gemba.

The Cost of Delay

Most project managers will admit that the most expensive mistake in Product Development is selecting a wrong or imperfect opportunity to work on. As a Lean practitioner, working on the product that the customer doesn’t value is the ultimate waste. So, we add a number of checks and balances to the front-end, adding to the cycle-time. Of course, the whole purpose of front-loading is to spend more time up front when room to navigate is wide and costs to test and prototype are cheap. But, this logic only works if the market is predictable and the cost of delay is cheap.

However, if the market is moving fast and is unpredictable, cost of delay begins going up. In a fast moving market, a team has to make much quicker decisions. This causes the project timeline to shorten. It also produces more accurate short-term forecasts, because it is a lot easier to make a decision based on a forecast looking a few weeks ahead than a few months ahead. So, what happens here is that the costs associated with selecting an imperfect opportunity to start with, could still be cheaper than the cost of delay. Basically, launching with an imperfect MVP product could still be advantageous and cheaper than the cost of delay (and losing momentum to a competitor snapping at your heels).

Why is the Fuzzy Front-end important?

1. The Fuzzy front-end lasts a long time and its duration is very important. It has three parts – a Beginning, a Middle and an End.
   • The Beginning – The time or point at which a product opportunity became visible to the company
   • The Middle – The time at which the company seriously begin working on the opportunity by assigning a team and other resources to developing it.
   • The End – The time at which the first unit shipped to a paying customer.
2. It is a cheap place to shop.
   • Buying opportunities to shorten cycle-time in the fuzzy front-end is cheap.
   • It is cheaper to test, experiment and prototype multiple alternatives
   • Lots more room to navigate, as critical constraining decisions haven’t been made yet.
3. Measure the duration of the fuzzy front-end with a “Market Clock”
   • The Market clock begins ticking when the product/customer opportunity appears and ends when the customers needs are met (could be by you or your competitor 😉)
   • The market clock ticks away whether your company is working on the product or not.
   • Even if your company isn’t incurring any PD or R&D costs, there is still the cost of delay, that of lost opportunity.
   • Market opportunity is greatest when sense of urgency is the lowest.

So, how do you ensure the best bargains?

1. Measure the duration of the Product Development process – from Fuzzy front-end to when the sproduct ships.
2. Calculate and use Cost of Delay to make the best decisions
3. Assign responsibilities and deadlines
4. Capture opportunities frequently and quickly. Remember –
   • The activities that can reduce risk at the lowest cost should be completed first.
   • Even imperfect answers improve decision making
   • You can make good impact if the small economic decisions are made correctly
   • Inside every bad choice lies a good choice, if exploited quickly.
   • Decentralize financial control and allow the lowest levels of the company make the economic decisions that they can at their level.
   • Don’t consider sunk costs. Use marginal economics to make incremental decisions.
5. Have a Strategy and Master Plan
6. Prevent Overloads. Don’t burn out your engineers!

So, happy bargain hunting, because I know all us Product Developers are cheap b***ards.

[1] Reinertson, Donald. Principles of Product Development Flow. Celeritas Publishing. [2] Smith, Preston and Reinertson, Donald. Developing Products in Half the Time, Second Edition. Wiley Publishing