In high-tech industries, pro'fit often depends ontime-to-market. A two-month schedule advance might double orquadruple your pro'fits, while a two-month delay might make yourcompany an "also ran."

Product development is an iterative process. For example, earlycomputers did not run at giga-cycle rates. Orville and Wilberdid not build a passenger airplane. Henry Ford did not developthe Thunderbird.

Today's computers, passenger airplanes and fancy cars resultedfrom the successes and failures (feedback) of previousiterations of product development. Product improvement is alsoan iterative process.

But, most companies burden their product development departmentswith inevitable schedule delays. How? They optimize theircompany around NON-iterative processes and static businessarchitectures, instead of optimizing around iterative processesand time-to-market.

Here some examples of iterative vs. NON-iterative businessprocesses.

Iterative processes Developing complex software systemsDeveloping a complex sa'les process Developing an accountingsystem Streamlining a manufacturing process Developing anInternet marketing website Building a company Developing newproduct specifications

Non-iterative processes Running a software program Making asa'les call Entering data into an accounting system Installingparts in an assembly-line Fulfilling an Internet order Doing thecompany's technical work Delivering specifications tomanufacturing

Companies try to minimize costs by using long iteration cycles,such as, performing quality control (QC) checks at the END of along process.

These long iteration cycles inevitably cause delays. Why? WhenQC discovers a problem at the end, they must disassemble theitem, fix the problem, assemble the item again, repeat the QCprocess, find another problem, disassemble, fix,reassemble...etc.

(It doesn't matter whether the product is an automobile, asoftware product, or a custom restaurant meal.)

Take a look at PLAN A, an iteration model where feedback "FB" iscreated only at Step 5 (QC) - or worse, in Step 7 by thecustomer.http://www.SeniorManagementServices.com/Images/plan-a.gif

(NOTE: Boxes represent processes, and circles represent data orthings. Each process generates data or things for anotherprocess.)

Notice that the model shows no schedule or time period. Feedbackfrom long iterations usually mask problems that would be betterfixed at the source instead of at the end.

Shorter iterations let you leverage new learning (feedback),prevent problems at the end, and even shorten development time.

Take a look at PLAN B, an iteration model where feedback iscreated at every step. More feedback = more learning and a moredynamic process.http://www.SeniorManagementServices.com/Images/plan-b.gif

Notice that PLAN B uses the same steps as PLAN A but collectsmuch more feedback. Many companies fail to gather and usefeedback, which is a source of delays and higher costs. It ismore effective to gather and use feedback ASAP to:

* Manage uncertainty by getting the information early, *Decrease risky situations, * Gain more certainty early indevelopment * Avoid expensive delays that occur later on * Helpyou plan optimum iteration lengths

As you can see, this organizational structure is circular, whereresults move clockwise and feedback moves counterclockwise.

============================================================ So,how should you organize your company -functional hierarchy orproject teams?============================================================

Let's look at the tradeoffs.

Functional hierarchies are an efficient structure for reducingshort-term costs because they tend to keep all workers busycontinuously.

While this is efficient, it can lead to delays because peopletend to get distracted from tasks that are critical to thedevelopment project.

Then, along comes a manager who accelerates a slipping scheduleby saying, "Things WILL get done on this project."