Performance and performance measurements in complex product development

Abstract: In today’s competitive environment, in which competition increases and the pace of technological change accelerates, the need for deploying product development investments more efficiently and effectively is stronger than ever. The ability to create streams of new successful products to the market is vital for every product delivering company’s survival. Performance measurements are important in order to evaluate the current state of operation of the product development and decide on actions to improve its’ performance. However, in contrast to the concept of productivity in the production process there are no commonly adopted methods for measuring performance within product development. The methodology used in this research is explorative multiple case studies at five companies developing complex products. Complex products in this research involve mechanics, electronics, and software. Moreover, complex products are often long living and most development work is evolutionary in character. An extensive interview study among senior managers and decision makers has been conducted to get a broad and systematic understanding of what performance is and what to measure. The main results developed from this research are two conceptual tools. The first one, the Performance Measurement Evaluation Matrix (PMEX) can be used to evaluate the performance measurement system used at a company. The PMEX makes it possible for managers to get a more holistic view and discuss what the performance measurement system is measuring, and what it is not measuring, in order to decide on what to measure. The second tool, the Product Development Organizational Performance Model (PDOPM) can be used to conceptually analyze performance in the product development process from a holistic system perspective. This is achieved by making efficiency, effectiveness, and uncertainty explicit and by showing how they relate at a strategic, project, and product implementation level. The PMEX and the PDOPM can be used by managers in order to increase the understanding of what performance is and to be able to decide on actions in order to improve the performance of the product development process.