Product Platform Performance
Achieving internal effects

Year: 2011
Author: Munk, Lone
Supervisor: Mortensen, Niels Henrik
Institution: Technical University of Denmark (DTU)
Page(s): 178

Abstract

The aim of this research is to improve understanding of platform-based product development by studying platform performance in relation to internal effects in companies. Platform-based product development makes it possible to deliver product variety and at the same time reduce the needed resources, and the subject has gained increased attention in industry and academia the past decade. Literature on platform-based product development is often based on single case studies and it is sparsely verified if expected effects are achieved. This makes it difficult to put forward realistic expectations for companies engaging in platform-based product development. Similarly platform assessment criteria lack empiricalverification regarding relevance and sufficiency.
The thesis focuses on
• the process of identifying and estimating internal effects,
• verification of performance of product platforms, (i.e. if the expected results are achieved), and
• reasons for possible deviations between these, comparing them to existing platform assessment
criteria.
The research results are based on 8 comprehensive case studies of product platforms in LEGO Company in the period of 2004-2009 (involving participant observation, observation, interviews and data analysis) and are validated by a series of interview with representatives from 12 Scandinavian companies.
A descriptive model of the process of identifying and estimating internal platform effects has been developed. It involves analysis of past data and estimates from experienced representatives from the different life systems phase systems of the platform products. The effects are estimated and modeled within different scenarios, taking into account financial and real option aspects. The model illustrates and supports estimation and quantification of internal platform effects. The model empirically verifies findings in literature and received moderate support from industry in the validation study.
The research findings document that product platforms achieve significant internal effects in terms of
• reduced development time (often around 25 %),
• reduced number of components (often around 50%) and
• reduced production cost and investments (often around 25%).
This verifies a significant, general improvement potential, a verification which has lacked in the literature. These findings underline the potential in platform-based product development as a way of creating competitive advantage. The findings also reveal that between half and two thirds of the platforms do however do not achieve the expected effects, despite that they do deliver some effects. This is mainly because of 1) lack of use of the platform assets, 2) technical reasons and 3) changed market conditions. These reasons are mentioned in literature, but only the two latter are addressed in platform assessment criteria. Hence a new platform assessment criterion is introduced, the platform user incentive criterion. Alongside with the introduction and recommendation of a platform user incentive criterion, recommendations are also made regarding focus on down-stream effects, modeling and viable estimation and quantification of effects, facilitation of performance tracking and goal-setting and finally to understand a product platform as an internal system in the company. A platform system model is introduced to support this understanding. Finally a categorization of different approaches to platform-based product development is introduced, based on the companies from the industrial study.
Abstrakt
Formålet med denne forskning er at forbedre forståelsen af platformsbaseret produktudvikling ved at studere hvilke interne effekter, virksomheder opnår. Platformsbaseret produktudvikling gør det muligt at fremstille mange produktvarianter og samtidig reducere ressourceforbruget, og emnet har fået øget opmćrksomhed fra både industri og det videnskabelige miljø det seneste årti.
Litteraturen om platformsbaseret produktudvikling er ofte baseret på enkelte case studier og det er ringe verificeret, om de forventede effekter opnås. Derfor er det svćrt at opstille realistiske forventninger for virksomheder, der ønsker at arbejde med platformsbaseret produktudvikling. På samme vis mangler der empirisk validering af relevans og tilstrćkkelighed af kriterier, der anvendes til at vurdere produkt platforme.
Denne afhandling fokuserer på
• processen med at identificerer og estimere interne platformseffekter,
• verificering af produkt platformes performance (om de forventede effekter opnås) samt
• hvilke årsager der kan vćre afvigelser og sammenholder disse årsager med eksisterende platforms
kriterier.
Forskningsresultaterne bygger på 8 dybdegående case studier af produktplatform i LEGO Company i perioden 2004-2009 (henholdsvis deltagende observation, observation, interviews og data analyse) og valideres af et interview studie med reprćsentanter fra 12 skandinaviske virksomheder. Der er opstillet en deskriptiv model, der beskriver en process med identifikation og estimering af platforms effekter. Processen indeholder analyser af historisk data materiale og estimater fra erfarne reprćsentanter fra platform produkternes forskellige livsfase systemer. Effekterne bliver estimeret og modeleret ud fra forskellige scenarier og medtager finansielle aspekter og reelle optioner. Modellen illustrerer og støtter kvantificering af interne platformeffekter. Modellen verificerer resultater fra litteraturen empirisk og modtog moderat støtte i det industrielle valideringsstudie.
Forskningsresultaterne dokumenter at produktplatforme opnår signifikante effekter i forhold til
• reduceret udviklingstid (ofte ca. 25 %),
• reduktion i antallet af komponenter (ofte ca. 50 %), og
• produktionsomkostninger og – investeringer (ofte ca. 25%).
Dette bekrćfter et signifikant, gennemgående potentiale, en verificering, der mangler i litteraturen. Resultaterne understreger potentialet for platformsbaseret produktudvikling i at skabe konkurrence fordele.