Strategy, structure and performance in product development: Observations from the auto industry

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Citation: Michael A. Cusumano, Kentaro Nobeoka (1992) Strategy, structure and performance in product development: Observations from the auto industry. Research Policy (RSS)
DOI (original publisher): 10.1016/0048-7333(92)90020-5
Semantic Scholar (metadata): 10.1016/0048-7333(92)90020-5
Sci-Hub (fulltext): 10.1016/0048-7333(92)90020-5
Internet Archive Scholar (fulltext): Strategy, structure and performance in product development: Observations from the auto industry
Tagged: Business (RSS) Product Development (RSS), Innovation (RSS)

Summary (Abstract)

Cusumano and Nobeoka offer a survey article on product development that includes observation from the auto industry with an emphasis on the Japanese auto industry in particular. As the title suggests, the author break down their survey in three components: product strategy which determines task requirements for particular projects, project structure which describes the processes in terms of management systems and organization, and performance as it extends to both projects and products.

Part of Cusumano and Nobeoka's contribution appears to be this three-fold method of breaking down product development in general (and product development in the auto industry which had, this point, become an academic literature on its own). Part of the benefits, the authors argue, is that it allows us to look at product development as it extends to cover multiple products produced by a single organization.

Product strategy includes the product concept and (importantly) the product/project complexity and scope. Structure and process variables include the internal organization and the management systems used to develop the project. Performance can be measured in a number of ways but might include input measures like labor hours, unit costs but, more common in product development, has included "lead time" or time to market. Additionally, performance has also been measured in specific output measures like product quality or in market performance.

The article goes through a review of major findings within its breakdown and focuses, to a large degree, on the work of Clark and Fujimoto's Product development performance: Strategy, organization, and management in the world auto industry who offer the most in-depth product-development focused analysis of the global auto industry. The authors adopt those authors US, Japan, and Europe breakdown in large part and pull from a large number of other authors working closely with and in the same literature as Clark and Fujimoto. In an important sense, this survey article provides a summary of that broader literature.

The major conclusions are that the Japanese had moderately complex projects or even lower-complexity (when work done by suppliers was taken into account). That Japanese had more heavyweight managers, phase overlapping, and internal communication than the US or European firms. And that Japanese were faster and more efficient in terms of performance.

In the fourth section of the paper, the authors provide a critique of this literature and point out that, while strong, still remains incomplete. In terms of future work the authors suggest work that will:

  • Evaluate the use of external resources and inter-organizational coordination;
  • Focus on question of internal project management with a focus on the mechanisms that drive performance;
  • Discuss multiple project coordination and the way that large firms management multiple overlapping projects simultaneously.
  • Look at the way that firms codify means of project development to treat product development like a production process.

The authors suggest that there seem to be different types of product development as practiced on a firm level. For examples, firms can either produce lines with a continuous spectrum or individual hit products but that each type requires very different degrees and types of coordination.

Theoretical and Practical Relevance

In the 18 years since it was published, Cusumano and Nobeoka's survey has been cited more than 100 times, essentially all within the product development literature. The concept of multiple project management and the inter-relatedness of project management resulted in both a series of papers by the two authors and ultimately in a book called Thinking beyond lean: How multi-project management is transforming product development and Toyota and other companies.