Why Leading High-Tech Companies Have Shifted Left
by John Maculley
In virtual forums around the world, medical device executives are discussing 3D printed titanium implants, the integration of robotics, and advances in digital surgery techniques. Currently under testing is the use of biologics in orthopedic repair. The combination of the patient’s cells, blood components, growth factors, and other natural substances have the power to speed recovery time by creating a healthier, less inflammatory environment. Innovations in this industry, like biologics, are positively impacting the quality of life for millions of people across the globe.
Before the global pandemic became widespread, a panel of industry experts debated whether Moore’s Law was still valid. The laws of physics now challenge Gordon Moore’s 1965 prediction that the number of transistors per integrated circuit would regularly double about every two years. However, with recent advances in lithography tooling, such as extreme ultraviolet (EUV), semiconductor companies brought 7nm nodes to market and have a line-of-sight to 5nm – breaking through what were once considered insurmountable barriers.
Leading aerospace executives are detailing plans for next-generation high-altitude propulsion technologies, improved passenger experiences, and electric aircraft development. They are paving the way for reduced carbon footprints and the beginning of cost-effective commercial space travel. One such innovation uses photons from the sun’s rays to produce momentum as they bounce off ultra-reflective, ultrathin mylar sails.
In-person collaborations may have been put on pause during self-isolation, but the pace of innovation is far from slowing. Many high-tech companies have accelerated their investments in next-generation technologies and new product development projects to position their businesses for breakout growth once the economy is humming.
How do innovations like these come to market?
Accel Management Group’s research and 20 years of experience helping high-tech companies improve their capacity to innovate, point to three primary success factors. These factors have historically been adopted by global manufacturing companies to reduce time-to-market (Exhibit 1). However, corollary benefits to innovation capacity are quickly coming to the forefront.
Front-Room Core Team Members
Team structure has emerged as a leading differentiator of success. Accel found that innovation engines are unleashed by including front-room members on product development core teams. Front-room roles are customer-facing and typically have their fingers on the pulse of the market. Teams that include front-room members, like design leads and marketing experts, are enabling advances in artificial intelligence, quantum computing, and the internet of things. The critical ingredient is a clear understanding of customer requirements. Empirical evidence reveals development teams that include front-room members have a higher probability of bringing game-changing products to market ahead of their competition. As we begin to see new segments, like digital surgery, blur the lines between medical devices, robotics, and biopharmaceuticals, to improve healthcare, it is clear that the way organizations form their teams affects their ability to innovate. New technologies that underpin the fourth industrial revolution further accelerate the need for adequately structured teams, causing executives to reconsider their product development approaches.
“The fourth industrial revolution is underway and is blurring the lines between the physical, digital, and biological spheres.”
– Klaus Schwab, founder and executive chairman of the World Economic Forum
Team structures within companies make up one dimension of the total innovation ecosystem that is alive within industries. For example, teams formed by consortiums, like the Interuniversity Microelectronics Centre (IMEC), work to solve shared industry problems. IMEC recently entered a three-year agreement to collaborate with Janssen, one of the companies of Johnson & Johnson, to jointly investigate how nanoelectronics can advance the development of precision medicine solutions. By bringing together cross-functional team members from across the globe and focusing them on solving the world’s most complex issues, they are better equipped to innovate at scale. Global incubators, like IMEC, help generate new ideas and novel approaches that eventually make their way to leading R&D departments around the world. Linking internal product development teams with industry-led teams can also create natural synergies that are difficult to replicate when going it alone.
The most important benefit to companies that structure their core teams to include front-room members is greater clarity on customer’s unmet needs. This insight early in the development process allows organizations to prioritize features that deliver economic value while eliminating those that merely drive up costs.
A second differentiator that is emerging among high-tech companies is boundary agreements to help govern the innovation process. Established between sponsoring bodies and execution teams, they are proving to deliver strategic advantages. Executives across many high-tech industries are implementing this approach to manage their most critical projects. The autonomy and decision-making authority offered to teams operating under these agreements create room for experimentation by installing guide rails. Executives trust that they can course-correct if success boundaries are breached, and teams feel empowered to explore new ideas. When combined with adequately structured core teams, the results are astounding. Decisions that would typically take weeks, or months, to navigate their way through endless committees, are made real-time. Boundary agreements help quantify customer requirements, financial targets, product performance specs, and market launch dates. They also serve as the basis for executive dashboards and transparent status reporting.
Companies that utilize boundary agreements see a marked increase in their ability to execute projects quickly. Core teams with boundary agreements transcend legacy process bottlenecks to operate more efficiently and effectively throughout the product development lifecycle.
Early and Deep Engagement
A third differentiator is the timing of engagement with downstream functions. Data indicates that by shifting back-room leaders left to help develop foundational technology platforms, companies can create organic infrastructures for innovation to flourish. This new way of operating starts with a strong desire from top executives to solve their most significant barriers to growth. Leaders who are focused on innovation make it clear to their staff why eliminating hurdles are not only in the best interests of their companies, but also their customers, and the world at large. They establish ‘north stars’ to help point teams in the right direction. Articulating, where a company wants to go, and why they want to go there creates shared missions. Few organizations are better at doing this than NASA.
“NASA is on the cusp of embarking on era-defining exploration. The civilization-changing technology we develop will deepen humanity’s scientific knowledge of the universe and how to take care of our ever-changing world.”
– Jim Bridenstine, NASA Administrator, State of NASA address, 2020
Once missions are clear, mindsets must begin to shift left. Serial thinking and processes should be challenged at all levels of the organization. In many high-tech companies today, it is common for R&D departments to operate in isolation before handing new technologies over to engineering departments. Engineering teams then work to develop products that meet customer requirements before handing them to operations teams to validate for manufacturability. This traditional waterfall approach to product development creates excessive rework that drives up costs and often forces the shelving of innovative ideas that occur downstream.
Alternatively, the most innovative industries employ a parallel approach to product development, where customers, strategic partners, and functional leaders are engaged upfront during concept development. Semiconductor companies utilize this model to develop prototypes and process recipes collaboratively. Product and manufacturing issues are addressed during the development of technology, in an agile way that promotes the up-front adoption of innovative ideas. In addition to compressing time-to-market and reducing downstream rework costs, early and deep engagement encourages cross-functional interdependent thinking that often leads to breakthroughs. The most creative companies take this model even further by engaging their core teams in cross-industry ecosystems that inject new perspectives and worldviews to existing knowledge sets.
The most significant benefit to companies that engage downstream functions early is a substantial reduction in discovery late in the cycle that typically leads to engineering rework, lower gross margins, and delayed product launches.
Shift Left Thinking
As we prepare our businesses to re-open, it is clear that executives need to reconsider their product development approaches by shifting left. Many leading high-tech companies have already transformed their organizations by structuring their product development teams to include front-room members, empowering them with boundary agreements, and engaging downstream functions early during concept development. As a result, these companies have created innovation engines that are driving top-line growth within their businesses and across their industries. (more on R&D productivity)
About the Author
John Maculley is a principal with Accel Management Group. In this role, he helps clients grow their companies and improve their operational efficiencies by designing and implementing customer-driven innovation and product development frameworks. Maculley brings more than 20 years of high-tech industry experience, which enables him to deliver innovative methods to improve time-to-market, reduce costs, advance performance, and increase revenue. Connect with him on LinkedIn at https://www.linkedin.com/in/johnmaculley/
About Accel Management Group
Accel Management Group helps leading high-tech and life sciences companies gain competitive advantage through data-driven Innovation and Operations Consulting. Our senior professionals have top-tier educations, have served in line-management positions and understand the dynamics and complexities of Fortune 1000 high-growth and mature companies. The company has completed over 500 industry-specific projects over the past two decades and accumulated benchmarking data from the top ten companies in each sector.
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