The PDMA Handbook of New Product Development

12.2. Time-To-Market Is Not Free

The first trap that awaits you is to assume that faster development is always desirable. Speed has its price, which might be paid by higher product cost, greater development expense, a reduced product feature set, higher risk, organizational changes and training, or staff burnout. Perhaps the easiest way to see this is to ask why you aren't moving faster now. If there were no impediment, you would already be taking advantage of speed techniques. You and your colleagues are smart, and most of the techniques are well known. Whether or not you have vocalized it, you know there is a price to be paid somewhere. Sometimes, the price is not worth benefit to be gained. Even if it is, if you continue to accelerate long enough, you will eventually reach this barrier.

The classic trade-offs of cycle time are against the first three items listed: higher product cost, greater development expense, and reduced product performance or feature set. These are illustrated in Figure 12.1. The six trade-offs pointed out here by the arrows can be calculated for each of your projects, as described in Chapter 2 of Smith and Reinertsen (1998). For instance, the most common trade-off is between cycle time and development expense, a value known as the cost of delay. The cost of delay may be less than $ 1000 per day, but for major projects in large companies, it can exceed $1 million per day in pretax profit. Using this value, you can wisely trade off time against money by ...