NPD Leading Practices Report 2022 Released by the GAO

“It’s good to learn from your mistakes. It’s better to learn from other people’s mistakes.”

– Warren Buffet

The Department of Defense (DOD), Department of Homeland Security (DHS) and the National Aeronautics and Space Administration (NASA) invest hundreds of billions of dollars each year to develop and deliver new products, technologies, and programs critical to their missions.

The Government Accountability Office (GAO), the independent agency commonly referred to as the “investigative arm of Congress”, provides Congress with oversight of these programs. The GAO helps government agencies learn from their and others’ mistakes by conducting post-launch reviews and performance audits. I like GAO reports because they are well-researched, scan both private and public company best practices, and they share valuable lessons that most new product practitioners and leaders can benefit from. My only criticism is that these reports are written primarily from one point of view, that of the auditor. I’m a big fan of 360-degree (multiple viewpoints) and peer-reviewed content. Having said that, I still find these reports valuable. I hope you do too.

In March 2022, the GAO released a new report outlining how leading commercial companies, such as Amazon and SpaceX (full list below), take a disciplined approach to product development. It describes that throughout an individual product’s development cycle, leading companies confront numerous, difficult trade-off decisions. To consistently deliver products with speed, leading companies assess project performance and risk continuously throughout the lifecycle.

The report is lengthy (124 pages). I read it so you don’t have to.  The GAO reveals four recommendations described as four key principles.

Four key principles:

1. Attain a sound business case.
   Leading companies seek to maximize their return on investment by ensuring there is customer demand for their proposed concepts. These validating activities occur before significant development begins. They examine business justification by obtaining early concept feedback from target customers and internal shareholders. Concepts and solution options are translated into cost, schedule, and performance parameters to serve as guideposts. These are updated throughout the development process. Early and continuous estimations enable leading companies to equip project teams with resources, sufficient experience and skill sets needed for success. Synthesis of these inputs is used to build a holistic business case informed by research and collaboration with users. Most importantly, leading companies can act decisively on business case information at key decision gates – they can end product development projects when needed.
2. Use an iterative design approach.
   Leading companies invest in modern design tools that enable more flexible, iterative development cycles. They deploy agile development methods to achieve rapid iterations of design-build-test to find a minimum viable product-market fit. Successive updates follow. Iterative design cycles are possible with modern tools such as 3-D printing and digital engineering. Specifically, digital twins allow companies to create virtual representations of their physical concepts and products.
3. Prioritize the schedule.
   Leading companies incorporate appropriate, periodic, and realistic oversight of individual projects (i.e. Gates) to confirm allocated resources continue to match project needs, including schedule. It is a process of negotiation with tough trade-off decisions throughout the lifecycle. Leading companies can act decisively to off-ramp capabilities that present a risk to delivering on schedule, the capability prioritized by customers. Gates focuses on realism – what can be achieved – rather than optimism.
4.  Collect user feedback to inform improvements to the minimum marketable product.
   Leading companies prioritize ongoing customer engagement throughout the development process and after product release. Additionally, they use feedback to roadmap and accelerate future developments. For example, they identify current problems and new feature suggestions that can be scheduled for future releases.

The GAO recommends key agencies, DOD, DHS and NASA incorporate the four principles into their respective acquisition processes.

Special thanks to clients who generously participated in the study, and to co-founder Dr. Robert Cooper for his work in Agile Stage-Gate®, cited in the GAO Report.

About the Research

Government agencies are increasingly investing in cyber-physical systems and new design engineering tools, both of which are not properly supported by existing acquisition processes. This research was conducted to improve acquisition structures and processes for management oversight.

GAO looks to leading practices from the private sector that can be thoughtfully applied to acquisitions to improve outcomes. GAO identified 13 leading product development companies based on rankings; interviewed company representatives; analyzed documents and synthesized findings to determine key product development structures and activities. Participating companies included Amazon, Carnival Corporation, Derecktor, GE Renewable Energy, Gulfstream Aerospace Corporation, IBM, Kiewit Corporation, Merck, Planet, Qualcomm, Siemens, SpaceX and, Virgin Orbit.

Interestingly, the GAO’s findings and recommendations align perfectly with our award-winning research study ‘Accelerating Innovation: Some Lessons Learned’ authored by our Founder, Dr Robert Cooper. Leading companies manage their governance process with heavy discipline and stay out of the projects, affording them more flexibility and agility.

You can access the full GAO Report here.

Pioneers in Innovation Process

Our company and Founders, world-renown innovation management scholars Dr Robert G. Cooper and Dr Scott J. Edgett, are the pioneers of the Stage-Gate® Governance Model for Product and Technology Innovation. Our story began with a first-of-its-kind innovation management benchmarking study called NewProd Studies. Its success transformed the innovation industry and equipped business leaders with a framework to drive risk down and success up. Since our inception, we have been on a continuous 45-year fact-finding mission to surface the most important practices and solutions for new product success. Today, we continue our mission to stay on top of innovation management so you can focus on what matters most to your organization and your customers – delivering high-impact innovation.

Connect with us to incorporate these lessons into your product development process.