Impact of Simulation in New Product Development - MIT

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Another way to think about IT value• In our prior research we found that few firms adjust staffing levels afterimplementation of efficiency-enabling IT, despite their making similar claimsabout business value• Managers typically do not have incentives to reduce size of their groups• Employees recognize initiates that will reduce headcount and mayundermine them (Sterman, Repenning & Koffman, Mngt Sci 1997)• Most firms maintain staffing levels and use IT-enabled efficiencies to workbetter—design more models with more features, serve customers better…“IT associated with increases in…variety, customer convenience, and service”(Brynjolfsson and Hitt, Jour Ec Perspectives 2000)• Because of this, most managers are—rightly—skeptical about many claims theyhear about potential IT-generated business value• Approach that looks at what companies actually do with IT-enabled efficienciescan help in two ways• Even simple models—if there are no metrics now—can spur better decisions• Can also make strategic choices enabled by IT more explicit and considered14© 2007 Robert Laubacher 14
Options for using increased design efficiency• Three potential ways to achieve benefits from increased design efficiencyDesign $perMonth– Cut NPD costs (cheaper)Design $perMonth# months# months– Design more products with richer features (better)Design $perMonthDesign $perMonth# months– Reduce development time (faster)# monthsDesign $perMonthDesign $perMonth# months# months15© 2007 Robert Laubacher 15
Page 1 and 2: Activity Based Performance Measurem
Page 3 and 4: Research objectives and methodology
Page 5 and 6: ABPM work to date• RFID in retail
Page 7 and 8: Study findings7© 2007 Robert Lauba
Page 9 and 10: Core benefits of simulationDirect b
Page 11 and 12: Measuring design efficiency• Desi
Page 13: Typical claims about IT-enabled eff
Page 17 and 18: Modeling simulation-enabled sales i
Page 19 and 20: Measuring impact of speeding up des
Page 21 and 22: Measuring higher quality design•
Page 23 and 24: Modeling impact of simulation0.300.
Page 25 and 26: Applicability to other firms• Can

Impact of Simulation in New Product Development - MIT

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