Product Design

and Development
Sixth Edition

Karl T. Ulrich
University of Pennsylvania

Steven D. Eppinger
Massachusetts Institute of Technology
About the Authors
Karl T. Ulrich University of Pennsylvania
is the CIBC Professor and Vice Dean of Innovation at the Wharton School at the Univer-
sity of Pennsylvania and is also Professor of Mechanical Engineering. He received the
S.B., S.M., and Sc.D. degrees in Mechanical Engineering from MIT. Professor Ulrich
has led the development efforts for many products, including medical devices and sport-
ing goods, and is the founder of several technology-based companies. As a result of this
work, he has received more than 24 patents. His current research concerns technological
innovation, product design, and entrepreneurship.

Steven D. Eppinger Massachusetts Institute of Technology

is the General Motors LGO Professor of Management Science and Innovation at the
Massachusetts Institute of Technology Sloan School of Management and is also Professor
of Engineering Systems at MIT. He received the S.B., S.M., and Sc.D. degrees in
Mechanical Engineering from MIT and served as Deputy Dean of the MIT Sloan School
for five years. He specializes in the management of complex product development pro-
cesses and has worked extensively with the automobile, electronics, aerospace, medical
devices, and capital equipment industries. His current research is aimed at the creation of
improved product development practices, systems engineering methods, and project man-
agement techniques.

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Preface
This book contains material developed for use in the interdisciplinary courses on product
development that we teach. Participants in these courses include graduate students in en-
gineering, industrial design students, and MBA students. While we aimed the book at in-
terdisciplinary graduate-level audiences such as this, many faculty teaching graduate and
undergraduate courses in engineering design have also found the material useful. Product
Design and Development is also for practicing professionals. Indeed, we could not avoid
writing for a professional audience, because most of our students are themselves profes-
sionals who have worked either in product development or in closely related functions.
This book blends the perspectives of marketing, design, and manufacturing into a
single approach to product development. As a result, we provide students of all kinds with
an appreciation for the realities of industrial practice and for the complex and essential
roles played by the various members of product development teams. For industrial prac-
titioners, in particular, we provide a set of product development methods that can be put
into immediate practice on development projects.
A debate often heard in the academic community relates to whether design should be
taught primarily by establishing a foundation of theory or by engaging students in loosely
supervised practice. For the broader activity of product design and development, we
reject both approaches when taken to their extremes. Theory without practice is ineffec-
tive because there are many nuances, exceptions, and subtleties to be learned in practical
settings and because some necessary tasks simply lack sufficient theoretical underpin-
nings. Practice without guidance can too easily result in frustration and fails to exploit
the knowledge that successful product development professionals and researchers have
accumulated over time. Product development, in this respect, is like sailing: proficiency
is gained through practice, but some theory of how sails work and some instruction in the
mechanics (and even tricks) of operating the boat help tremendously.
We attempt to strike a balance between theory and practice through our emphasis on
methods. The methods we present are typically step-by-step procedures for completing
tasks, but rarely embody a clean and concise theory. In some cases, the methods are sup-
ported in part by a long tradition of research and practice, as in the chapter on product
development economics. In other cases, the methods are a distillation of relatively recent
and ad hoc techniques, as in the chapter on design for environment. In all cases, the
methods provide a concrete approach to solving a product development problem. In our
experience, product development is best learned by applying structured methods to ongo-
ing project work in either industrial or academic settings. Therefore, we intend this book
to be used as a guide to completing development tasks either in the context of a course
project or in industrial practice.
An industrial example or case study illustrates every method in the book. We chose to
use different products as the examples for each chapter rather than carrying the same
example through the entire book. We provide this variety because we think it makes the
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vi Preface

book more interesting and because we hope to illustrate that the methods can be applied
to a wide range of products, from industrial equipment to consumer products.
We designed the book to be extremely modular—it consists of 19 independent chap-
ters. Each chapter presents a development method for a specific portion of the product
development process. The primary benefit of the modular approach is that each chapter
can be used independently of the rest of the book. This way, faculty, students, and practi-
tioners can easily access the material they find most useful.
This sixth edition of the book includes a new chapter on design of services, as well as
updated examples and data. We have also revised the book throughout with insights from
recent research and innovations in practice.
To supplement this textbook, we have developed a Web site on the Internet. This is
intended to be a resource for instructors, students, and practitioners. We will keep the site
current with additional references, examples, and links to available resources related to
the product development topics in each chapter. Please make use of this information via
the Internet at [Link].
The application of structured methods to product development also facilitates the
study and improvement of development processes. We hope, in fact, that readers will
use the ideas in this book as seeds for the creation of their own development methods,
uniquely suited to their personalities, talents, and company environments. We encourage
readers to share their experiences with us and to provide suggestions for improving this
material. Please write to us with your ideas and comments at ulrich@[Link]
and eppinger@[Link].
 [Link]

Acknowledgments
Hundreds of people contributed to this book in large and small ways. We are grateful to
the many industrial practitioners who provided data, examples, and insights. We appreci-
ate the assistance we have received from numerous academic colleagues, research assis-
tants, and support staff, from our sponsors, and from the McGraw-Hill team. Indeed we
could not have completed this project without the cooperation and collaboration of many
professionals, colleagues, and friends. Thank you all.
Financial support for the initial development of this textbook came from the Alfred P.
Sloan Foundation, from the MIT Leaders for Manufacturing Program, and from the MIT
Center for Innovation in Product Development.
Many industrial practitioners helped us in gathering data and developing examples. We
would particularly like to acknowledge the following: Richard Ahern, Liz Altman, Lindsay
Anderson, Terri Anderson, Mario Belsanti, Mike Benjamin, Scott Beutler, Bill Burton, Michael
Carter, Jim Caruso, Pat Casey, Scott Charon, Victor Cheung, James Christian, Alan Cook,
David Cutherell, Tim Davis, Tom Davis, John Elter, George Favaloro, Marc Filerman, David
Fitzpatrick, Gregg Geiger, Anthony Giordano, David Gordon, Kamala Grasso, Matt Haggerty,
Rick Harkey, Matthew Hern, Alan Huffenus, Art Janzen, Randy Jezowski, Carol Keller, Matt
Kressy, Edward Kreuzer, David Lauzun, Peter Lawrence, Brian Lee, David Levy, Jonathan Li,
Albert Lucchetti, Brint Markle, Paul Martin, Doug Miller, Leo Montagna, Al Nagle, John
Nicklaus, Hossain Nivi, Chris Norman, Paolo Pascarella, E. Timothy Pawl, Paul Piccolomini,
Amy Potts, Earl Powell, Jason Ruble, Virginia Runkle, Nader Sabbaghian, Mark Schurman,
Norm Seguin, David Shea, Wei-Ming Shen, Sonja Song, Leon Soren, Paul Staelin, Michael
Stephens, Scott Stropkay, Larry Sullivan, Malcom Taylor, Brian Vogel, David Webb, Bob
Weisshappel, Dan Williams, Gabe Wing, and Mark Winter.
We have received tremendous assistance from our colleagues who have offered fre-
quent encouragement and support for our somewhat unusual approach to teaching and
research, some of which is reflected in this book. We are especially indebted to the MIT
Leaders for Manufacturing (LFM) Program and to the MIT Center for Innovation in
Product Development (CIPD), two exemplary partnerships involving major manufactur-
ing firms and MIT’s engineering and management schools. We have benefited from col-
laboration with the faculty and staff associated with these programs, especially Gabriel
Bitran, Kent Bowen, Don Clausing, Tom Eagar, Charlie Fine, Woodie Flowers, Steve
Graves, John Hauser, Rebecca Henderson, Maurice Holmes, Tom Magnanti, Kevin Otto,
Don Rosenfield, Warren Seering, Shoji Shiba, Anna Thornton, Jim Utterback, Eric von
Hippel, Dave Wallace, and Dan Whitney. We have received financial support from LFM,
CIPD, and the Gordon Book Fund. Most important, LFM and CIPD partner companies
have provided us with unparalleled access to industrial projects and research problems in
product development and manufacturing.
Several faculty members have helped us by reviewing chapters and providing feedback
from their in-class trials in teaching with this material. We are particularly grateful to
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viii Acknowledgments

these reviewers and “beta testers”: Alice Agogino, Steven Beyerlein, Don Brown, Steve
Brown, Charles Burnette, Gary Cadenhead, Roger Calantone, Cho Lik Chan, Kim Clark,
Richard L. Clark, Jr., Morris Cohen, Denny Davis, Michael Duffey, William Durfee,
Donald Elger, Josh Eliashberg, David Ellison, Woodie Flowers, Gary Gabriele, Paulo
Gomes, Abbie Griffin, Marc Harrison, Rebecca Henderson, Tim Hight, Mike Houston,
Marco Iansiti, Kos Ishii, Nitin Joglekar, R. T. Johnson, Kyoung-Yun “Joseph” Kim,
Annette Köhler, Viswanathan Krishnan, Yuyi Lin, Richard Locke, Bill Lovejoy, Jeff
Meldman, Farrokh Mistree, Donatus Ohanehi, Wanda Orlikowski, Louis Padulo, Matthew
Parkinson, Robert Pelke, Warren Seering, Paul Sheng, Robert Smith, Carl Sorensen, Mark
Steiner, Cassandra Telenko, Christian Terwiesch, Chuck Turtle, Marcie Tyre, Dan
Whitney, Kristin Wood, Maria Yang, and Khim-Teck Yeo.
Several industrial practitioners and training experts have also assisted us by reviewing
and commenting on draft chapters: Wesley Allen, Geoffrey Boothroyd, Gary Burchill,
Clay Burns, Eugene Cafarelli, James Carter, Kimi Ceridon, David Cutherell, Gerard
Furbershaw, Jack Harkins, Gerhard Jünemann, David Meeker, Ulrike Närger, B. Joseph
Pine II, William Townsend, Brian Vogel, and John Wesner.
We also wish to acknowledge the more than 1,000 students in the classes in which we
have tested these teaching materials. These students have been in several teaching programs
at MIT, Helsinki University of Technology, Rhode Island School of Design, HEC Paris,
STOA (Italy), University of Pennsylvania, and Nanyang Technological University (Singa-
pore). Many students provided constructive comments for improving the structure and deliv-
ery of the material finally contained here. Also, our experiences in observing the students’ use
of these methods in product development projects have greatly helped us refine the material.
Several students served as research assistants to help investigate many of the develop-
ment methods, examples, and data contained in the book. These individuals are Michael
Baeriswyl (Chapters 12, 17, and 18), Anitha Balasubramaniam (Chapter 18), Paul Brody
(Chapter 11), Tom Foody (Chapter 18), Amy Greenlief (Chapter 14), Christopher Hession
(Chapter 4), Eric Howlett (Chapter 8), Timothy Li (Chapter 5), Tom Pimmler (Chapter 13
Appendices), Stephen Raab (Chapter 19), Harrison Roberts (Chapter 13 Appendices),
Jonathan Sterrett (Chapter 5), and Gavin Zau (Chapter 7).
Other MIT students have also contributed by assisting with data collection and by of-
fering comments and stimulating criticisms related to some of the chapters: Tom Abell,
E. Yung Cha, Steve Daleiden, Russell Epstein, Matthew Fein, Brad Forry, Mike Frauens,
Ben Goss, Daniel Hommes, Bill Liteplo, Habs Moy, Robert Northrop, Leslie Prince
Rudolph, Vikas Sharma, and Ranjini Srikantiah.
The staff throughout the McGraw-Hill Education organization has been superb. We are
particularly grateful for the support of our sponsoring editor Laura Hurst Spell. We also
appreciate the efforts of project managers Heather Ervolino and Mary Jane Lampe, copy
editor Rich Wright, photo researcher Mary Reeg.
Finally, we thank our families for their love and support. Our parents provided much
encouragement. Nancy, Julie, Lauren, Andrew, Jamie, and Nathan have shown endless
patience over the years of this ongoing product development project.
Karl T. Ulrich
Steven D. Eppinger
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Brief Contents
About the Authors iv 10 Product Architecture 185
Preface v 11 Industrial Design 209
Acknowledgments vii
12 Design for Environment 231
1 Introduction 1
13 Design for Manufacturing 255
2 Development Processes and
Organizations 11 14 Prototyping 291

3 Opportunity Identification 33 15 Robust Design 313

4 Product Planning 53 16 Patents and Intellectual Property 333

5 Identifying Customer Needs 73 17 Design of Services 355

6 Product Specifications 91 18 Product Development Economics 369

7 Concept Generation 117 19 Managing Projects 397

8 Concept Selection 145 Index 423

9 Concept Testing 167

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Contents
About the Authors iv Product Development Process Flows 22
Preface v The Tyco Product Development
Acknowledgments vii Process 23
Product Development Organizations 25
Chapter 1 Organizations Are Formed by Establishing Links
among Individuals 25
Introduction 1 Organizational Links May Be Aligned with Functions,
Characteristics of Successful Product Projects, or Both 25
Development 2 Choosing an Organizational Structure 28
Who Designs and Develops Products? 3 Distributed Product Development Teams 28
Duration and Cost of Product The Tyco Product Development
Development 5 Organization 30
The Challenges of Product Development 6 Summary 30
Approach of This Book 6 References and Bibliography 31
Structured Methods 7 Exercises 32
Industrial Examples 7 Thought Questions 32
Organizational Realities 7
Roadmap of the Book 8 Chapter 3
References and Bibliography 10 Opportunity Identification 33
Exercises 10
Thought Question 10 What Is an Opportunity? 34
Types of Opportunities 34
Chapter 2 Tournament Structure of Opportunity
Identification 36
Development Processes and
Effective Opportunity Tournaments 37
Organizations 11
Opportunity Identification Process 39
The Product Development Process 12 Step 1: Establish a Charter 39
Concept Development: The Front-End Step 2: Generate and Sense Many
Process 16 Opportunities 40
Adapting the Generic Product Development Techniques for Generating Opportunities 40
Process 18 Step 3: Screen Opportunities 46
Technology-Push Products 18 Step 4: Develop Promising Opportunities 47
Platform Products 20 Step 5: Select Exceptional Opportunities 47
Process-Intensive Products 20 Step 6: Reflect on the Results and the
Customized Products 20 Process 49
High-Risk Products 21 Summary 50
Quick-Build Products 21 References and Bibliography 50
Product-Service Systems 21 Exercises 51
Complex Systems 22 Thought Questions 51
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Chapter 4 References and Bibliography 89

Product Planning 53 Exercises 90
Thought Questions 90
The Product Planning Process 54
Four Types of Product Development Projects 55 Chapter 6
The Process 56
Product Specifications 91
Step 1: Identify Opportunities 57
Step 2: Evaluate and Prioritize Projects 57 What Are Specifications? 92
Competitive Strategy 58 When Are Specifications Established? 93
Market Segmentation 58 Establishing Target Specifications 94
Technological Trajectories 59 Step 1: Prepare the List of Metrics 95
Product Platform Planning 60 Step 2: Collect Competitive Benchmarking
Evaluating Fundamentally New Product Information 99
Opportunities 61 Step 3: Set Ideal and Marginally Acceptable Target
Balancing the Portfolio 63 Values 99
Step 3: Allocate Resources and Plan Timing 64 Step 4: Reflect on the Results and the Process 103
Resource Allocation 64 Setting the Final Specifications 103
Project Timing 66 Step 1: Develop Technical Models of the Product 105
The Product Plan 66 Step 2: Develop a Cost Model of the Product 106
Step 4: Complete Pre-Project Planning 66 Step 3: Refine the Specifications, Making Trade-Offs
Mission Statements 67 Where Necessary 108
Assumptions and Constraints 68 Step 4: Flow Down the Specifications as
Staffing and Other Pre-Project Planning Appropriate 109
Activities 69 Step 5: Reflect on the Results and the Process 111
Step 5: Reflect on the Results and the Process 69 Summary 111
Summary 70 References and Bibliography 112
References and Bibliography 70 Exercises 113
Exercises 72 Thought Questions 113
Thought Questions 72 Appendix
Target Costing 114
Chapter 5
Identifying Customer Needs 73 Chapter 7
Concept Generation 117
The Importance of Latent Needs 75
The Process of Identifying Customer Needs 75 The Activity of Concept Generation 118
Step 1: Gather Raw Data from Customers 77 Structured Approaches Reduce the Likelihood of
Choosing Customers 78 Costly Problems 119
The Art of Eliciting Customer Needs Data 79 A Five-Step Method 119
Documenting Interactions with Customers 81 Step 1: Clarify the Problem 120
Step 2: Interpret Raw Data in Terms of Customer Decompose a Complex Problem into Simpler
Needs 82 Subproblems 121
Step 3: Organize the Needs into a Hierarchy 84 Focus Initial Efforts on the Critical
Step 4: Establish the Relative Importance of the Subproblems 123
Needs 86 Step 2: Search Externally 124
Step 5: Reflect on the Results and the Process 87 Interview Lead Users 124
Summary 88 Consult Experts 125
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Search Patents 125 Appendix A

Search Published Literature 126 Concept-Screening Matrix Example 164
Benchmark Related Products 127 Appendix B
Step 3: Search Internally 127 Concept-Scoring Matrix Example 165
Both Individual and Group Sessions Can Be
Useful 128 Chapter 9
Hints for Generating Solution Concepts 129 Concept Testing 167
Step 4: Explore Systematically 131
Concept Classification Tree 132 Step 1: Define the Purpose of the Concept Test 169
Concept Combination Table 134 Step 2: Choose a Survey Population 169
Managing the Exploration Process 137 Step 3: Choose a Survey Format 170
Step 5: Reflect on the Solutions and the Step 4: Communicate the Concept 171
Process 139 Matching the Survey Format with the Means of
Summary 140 Communicating the Concept 175
References and Bibliography 141 Issues in Communicating the Concept 175
Exercises 143 Step 5: Measure Customer Response 177
Thought Questions 143 Step 6: Interpret the Results 177
Step 7: Reflect on the Results and the Process 180
Chapter 8 Summary 181
Concept Selection 145 References and Bibliography 181
Exercises 182
Concept Selection Is an Integral Part of the Product Thought Questions 182
Development Process 146 Appendix
All Teams Use Some Method for Choosing a Estimating Market Sizes 183
Concept 147
A Structured Method Offers Several Benefits 150 Chapter 10
Overview of Methodology 151
Product Architecture 185
Concept Screening 152
Step 1: Prepare the Selection Matrix 152 What Is Product Architecture? 186
Step 2: Rate the Concepts 153 Types of Modularity 188
Step 3: Rank the Concepts 154 When Is the Product Architecture Defined? 189
Step 4: Combine and Improve the Concepts 154 Implications of the Architecture 189
Step 5: Select One or More Concepts 154 Product Change 189
Step 6: Reflect on the Results and the Process 155 Product Variety 190
Concept Scoring 156 Component Standardization 191
Step 1: Prepare the Selection Matrix 156 Product Performance 191
Step 2: Rate the Concepts 157 Manufacturability 192
Step 3: Rank the Concepts 158 Product Development Management 192
Step 4: Combine and Improve the Concepts 158 Establishing the Architecture 193
Step 5: Select One or More Concepts 158 Step 1: Create a Schematic of the Product 193
Step 6: Reflect on the Results and the Process 159 Step 2: Cluster the Elements of the Schematic 195
Caveats 159 Step 3: Create a Rough Geometric Layout 197
Summary 161 Step 4: Identify the Fundamental and Incidental
References and Bibliography 161 Interactions 198
Exercises 162 Delayed Differentiation 199
Thought Questions 163 Platform Planning 202
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Differentiation Plan 202 References and Bibliography 229

Commonality Plan 202 Exercises 230
Managing the Trade-Off between Differentiation and Thought Questions 230
Commonality 203
Related System-Level Design Issues 204 Chapter 12
Defining Secondary Systems 204
Design for Environment 231
Establishing the Architecture of the Chunks 205
Creating Detailed Interface Specifications 205 What Is Design for Environment? 233
Summary 206 Two Life Cycles 234
References and Bibliography 206 Environmental Impacts 235
Exercises 208 History of Design for Environment 236
Thought Questions 208 Herman Miller’s Journey toward Design for
Environment 236
Chapter 11 The Design for Environment Process 237
Industrial Design 209 Step 1: Set the DFE Agenda: Drivers, Goals, and
Team 238
What Is Industrial Design? 211 Identify the Internal and External Drivers of DFE 238
Assessing the Need for Industrial Design 213 Set the DFE Goals 239
Expenditures for Industrial Design 213 Set Up the DFE Team 240
How Important Is Industrial Design to a Product? 213 Step 2: Identify Potential Environmental
Ergonomic Needs 214 Impacts 241
Aesthetic Needs 215 Step 3: Select DFE Guidelines 242
The Impact of Industrial Design 215 Step 4: Apply the DFE Guidelines to the Initial
Is Industrial Design Worth the Investment? 215 Product Design 244
How Does Industrial Design Establish a Corporate Step 5: Assess the Environmental Impacts 245
Identity? 218 Compare the Environmental Impacts to DFE
The Industrial Design Process 219 Goals 246
1. Investigation of Customer Needs 219 Step 6: Refine the Product Design to Reduce or
2. Conceptualization 219 Eliminate the Environmental Impacts 246
3. Preliminary Refinement 220 Step 7: Reflect on the DFE Process and
4. Further Refinement and Final Concept Results 247
Selection 221 Summary 249
5. Control Drawings or Models 222 References and Bibliography 249
6. Coordination with Engineering, Manufacturing, Exercises 250
and External Vendors 222 Thought Questions 251
The Impact of Computer-Based Tools on the ID Appendix
Process 222 Design for Environment Guidelines 252
Management of the Industrial Design Process 223
Timing of Industrial Design Involvement 224 Chapter 13
Assessing the Quality of Industrial Design 226
Design for Manufacturing 255
1. Quality of the User Interface 226
2. Emotional Appeal 226 Design for Manufacturing Defined 257
3. Ability to Maintain and Repair the Product 226 DFM Requires a Cross-Functional Team 257
4. Appropriate Use of Resources 228 DFM Is Performed throughout the Development
5. Product Differentiation 228 Process 257
Summary 228 Overview of the DFM Process 258
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Step 1: Estimate the Manufacturing Costs 258 Chapter 14

Transportation Costs 261 Prototyping 291
Fixed Costs versus Variable Costs 261
The Bill of Materials 262 Understanding Prototypes 293
Estimating the Costs of Standard Components 263 Types of Prototypes 293
Estimating the Costs of Custom Components 263 What Are Prototypes Used For? 296
Estimating the Cost of Assembly 264 Principles of Prototyping 299
Estimating the Overhead Costs 265 Analytical Prototypes Are Generally More Flexible
Step 2: Reduce the Costs of Components 266 Than Physical Prototypes 299
Understand the Process Constraints and Cost Physical Prototypes Are Required to Detect
Drivers 266 Unanticipated Phenomena 299
Redesign Components to Eliminate Processing A Prototype May Reduce the Risk of Costly
Steps 267 Iterations 300
Choose the Appropriate Economic Scale for the Part A Prototype May Expedite Other Development
Process 267 Steps 302
Standardize Components and Processes 268 A Prototype May Restructure Task Dependencies 303
Adhere to “Black Box” Component Prototyping Technologies 303
Procurement 269 3D CAD Modeling and Analysis 303
Step 3: Reduce the Costs of Assembly 270 3D Printing 304
Keeping Score 270 Planning for Prototypes 305
Integrate Parts 270 Step 1: Define the Purpose of the Prototype 305
Maximize Ease of Assembly 271 Step 2: Establish the Level of Approximation of the
Consider Customer Assembly 272 Prototype 306
Step 4: Reduce the Costs of Supporting Step 3: Outline an Experimental Plan 306
Production 272 Step 4: Create a Schedule for Procurement,
Minimize Systemic Complexity 273 Construction, and Testing 306
Error Proofing 273 Planning Milestone Prototypes 307
Step 5: Consider the Impact of DFM Decisions on Summary 308
Other Factors 274 References and Bibliography 309
The Impact of DFM on Development Time 274 Exercises 310
The Impact of DFM on Development Cost 274 Thought Questions 310
The Impact of DFM on Product Quality 275
The Impact of DFM on External Factors 275 Chapter 15
Results 275
Robust Design 313
Summary 277
References and Bibliography 278 What Is Robust Design? 314
Exercises 279 Design of Experiments 316
Thought Questions 280 The Robust Design Process 317
Appendix A Step 1: Identify Control Factors, Noise Factors, and
Materials Costs 281 Performance Metrics 317
Appendix B Step 2: Formulate an Objective Function 318
Component Manufacturing Costs 282 Step 3: Develop the Experimental Plan 319
Appendix C Experimental Designs 319
Assembly Costs 288 Testing Noise Factors 321
Appendix D Step 4: Run the Experiment 323
Cost Structures 289 Step 5: Conduct the Analysis 323
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Computing the Objective Function 323 In What Ways Are Services and Products
Computing Factor Effects by Analysis of Means 324 Different? 357
Step 6: Select and Confirm Factor Setpoints 325 The Service Design Process 358
Step 7: Reflect and Repeat 325 The Service Concept 358
Caveats 326 Concept Development at Zipcar 360
Summary 326 The Service Process Flow Diagram 361
References and Bibliography 327 Subsequent Refinement 362
Exercises 328 Downstream Development Activities in
Thought Questions 328 Services 362
Appendix Prototyping a Service 363
Orthogonal Arrays 329 Growing Services 364
Continuous Improvement 364
Chapter 16 Summary 365
Patents and Intellectual Property 333 References and Bibliography 366
Exercises 366
What Is Intellectual Property? 334
Thought Questions 367
Overview of Patents 335
Utility Patents 336
Preparing a Disclosure 336 Chapter 18
Step 1: Formulate a Strategy and Plan 338 Product Development Economics 369
Timing of Patent Applications 338
Elements of Economic Analysis 370
Type of Application 339
Quantitative Analysis 370
Scope of Application 340
Qualitative Analysis 371
Step 2: Study Prior Inventions 340
When Should Economic Analysis Be Performed? 371
Step 3: Outline Claims 341
Economic Analysis Process 372
Step 4: Write the Description of the Invention 342
Step 1: Build a Base-Case Financial Model 372
Figures 343
Estimate the Timing and Magnitude of Future Cash
Writing the Detailed Description 343
Inflows and Outflows 372
Defensive Disclosure 344
Compute the Net Present Value of the Cash Flows 374
Step 5: Refine Claims 345
Other Cash Flows 375
Writing the Claims 345
Supporting Go/No-Go and Major Investment
Guidelines for Crafting Claims 348
Decisions 376
Step 6: Pursue Application 348
Step 2: Perform Sensitivity Analysis 377
Step 7: Reflect on the Results and the Process 350
Development Cost Example 377
Summary 350
Development Time Example 379
References and Bibliography 351
Understanding Uncertainties 380
Exercises 351
Step 3: Use Sensitivity Analysis to Understand
Thought Questions 351
Trade-Offs 380
Appendix A
Potential Interactions 382
Trademarks 352
Trade-Off Rules 383
Appendix B
Limitations of Quantitative Analysis 384
Advice to Individual Inventors 352
Step 4: Consider the Influence of Qualitative
Chapter 17 Factors 385
Projects Interact with the Firm, the Market, and the
Design of Services 355 Macro Environment 385
Product-Service Systems 356 Carrying Out Qualitative Analysis 387
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Summary 388 The Contract Book 403

References and Bibliography 389 Project Task List 403
Exercises 390 Team Staffing and Organization 405
Thought Questions 390 Project Schedule 406
Appendix A Project Budget 407
Time Value of Money and the Net Present Value Project Risk Plan 407
Technique 391 Modifying the Baseline Plan 409
Appendix B Accelerating Projects 409
Modeling Uncertain Cash Flows Using Net Project Execution 412
Present Value Analysis 393 Coordination Mechanisms 412
Assessing Project Status 414
Chapter 19 Corrective Actions 414
Managing Projects 397 Postmortem Project Evaluation 416
Summary 417
Understanding and Representing Tasks 398 References and Bibliography 418
Sequential, Parallel, and Coupled Tasks 398 Exercises 420
The Design Structure Matrix 400 Thought Questions 420
Gantt Charts 401 Appendix
PERT Charts 402 Design Structure Matrix Example 421
The Critical Path 402
Baseline Project Planning 403 Index 423