10 minutes to read With insights from... Réka Leisztner Senior Consulting Manager reka.leisztner@zuehlke.com Since the emergence of product digitalisation, many leading manufacturing companies have faced enormous challenges in transforming and revolutionising their product management and R&D processes to adapt to the new era. Ultimately, the goal is to create physical products that seamlessly integrate digital experiences and services, providing end-to-end solutions to customers. This isn’t always an easy undertaking. While various great approaches – such as agile, scrum, design thinking, and the adoption of new tools – have been introduced to address this challenge, they alone do not drive the profound mindset that transformation needed to create smart and connected products. This raises a critical question, what would? In this article, we try to answer this question and illustrate the way to a seamless device experience. Hardware and software complement each other and create new synergies Organisations that were market leaders before the digital era had a very well-designed development process that guaranteed exceptional quality, outstanding product performance, and fast time-to-market. Market launches occurred every couple of years, allowing engineers ample time to develop and test the hardware. These products were eventually launched on a specific date, when they reached perfection, and remained on the market for years. During this time, software development was only a delivery centre, enabling already developed hardware capabilities, but software alone was not seen as value creator or differentiating factor. ' The digital era brought new players into the development process and transformed a product into a complex system that has to integrate different software and hardware. ' Réka Leisztner Senior Consulting Manager, Zühlke Group However, this landscape has dramatically shifted. Although, the integration of software into physical devices has been around for decades, it supported only the hardware to work. The introduction of different interfaces, connectivity, services, third-party software, machine learning, AI, data storage, you name it… changed the paradigm. Now, product “launch” and “revenue creation” no longer solely depend on new hardware at a company. The continuous evolution and release of different software services updates hardware capabilities, as they together form The Product as one entity. With hardware, software, and all other supporting components, a product became a complex system which can’t be looked at only from the hardware perspective, simply adding everything on later. This transformation brings new business models and enables physical devices to stay on the market longer, facilitating recurring revenue and the creation of more sustainable products. On the other hand, it also changes the rules of the game by introducing two critical factors: The ultimate differentiating factor and competitive advantage, called customer experience. The driver for growth and innovation, called data. Looking back at the product development process (PDP) that once guaranteed success, it is essential to ask, do the current processes and mindsets truly consider the extended software focus? Is software, and other attached sub-systems, recognised as a core element of the strategy or is it still treated as a peripheral component that supports the hardware? In other words, is it still correct to focus on the hardware development process and separate the software at the start of product creation? We believe it’s not and here is why: Key to successful connected product development is viewing the product as a system Let’s put ourselves in our customer’s shoes and consider an example of the world’s leading loudspeaker brand that’s known for its outstanding and best-in-class sound quality. Suppose this company recently released a smart speaker that can be controlled through your voice and an app, fully compatible with major streaming services, and offers an automatic equalisation adjustment for optimal sound based on the current song. The user begins using the product and it delivers the expected incredible sound quality. So, the user keeps using it on a daily basis and soon experiences connectivity issues – the voice command often doesn’t work and the app use is so frustrating that it makes them want to hit it against the wall. What could be the user’s conclusion? A: The user will still buy and pay for the higher priced product, committed to always love it, even though it makes them very frustrated as they can’t even use it properly. Never mind, the user is loyal. B: The user concludes that it used to be an incredible product, but the company must be in trouble. They can’t use it anymore and must compromise on the sound quality, so that at least they can listen to music without anger. The user looks for a competitor product. It’s probably easy to see the more likely scenario. Customers don’t differentiate between hardware, software, sensors, or gateways when evaluating a product. They only care about the product as a complete solution and the value it creates. If the app fails for instance, the customers will never point to John, the Head of App Development, and ask why it’s not working. They will point to the company as a whole because in their eyes the entire product has failed. But how is this relevant for development processes? The key to successful product development of digital, smart, or connected products lies in viewing the product as a system and this system requires owners. Rather than exclusively specifying the hardware and treating software related elements as a secondary requirement, the product should be considered holistically from the strategic phase. This view is the game-changing element. So, let’s look at this more closely. From silos to synergy with systems in action You might be heard of the term 'systems thinking' in various context. And as much as it is valuable concept in many field, product development strives to be counted among them. Thinking in end solutions and systems in development context is a whole new mindset to define, design and develop a product with complete transparency and traceability from the overall system decomposed to the smallest component. It is the mentality of 'if I work on this element, it will impact the overall system functionality'. While this may sound complicated, it does not have to be. Traditional organisational structures are not built to deliver system integration, as they often operate in silos. This isn’t a problem per se; silos can have their rights and purposes. However, the more important question is whether these silos are supporting each other with data, metrics, and processes to develop systems. The goal is not to reshape an established organisation based on how a customer experiences the product. Instead, the focus should be on ensuring that the operating model delivers value through integrated system functions rather than isolated components. So, should you involve more systems engineers from now on? Absolutely, we will get there… but let’s take a few steps back and establish a setup where systems engineers have the content to work from – the operating model for integrated solutions. Requirements are there, yet always missing What could go wrong with the loudspeaker? There are tons of possibilities that create such a product failure. If we look into the latest reports of digitalisation and smart connected development, some of the emerging problems are the complexity of understanding customers, defining the product, and ensuring security and compliance. Requirements are as subjective as taste or opinions and can have as many layers as a century-old tree. While it is easy to say, 'we need requirements', it is crucial to specify exactly what that means, who will define them, on which layer, when they should be developed and how to document them. This process must be engineered from top-down to bottom-up. ' A user doesn't care that the hardware works perfectly when a software part fails. Poor digital performance leads to negative experience and results in losing customers, regardless of the hardware quality. ' Réka Leisztner Senior Consulting Manager, Zühlke Group Here lies a common issue within and between organisations – hardware-focus instead of solution-focus. Product requirements are often very detailed, consisting of a list of thousands of lines. However, a closer look clearly shows these well-prepared requirements focus primarily on hardware. Only a few, precious 2-3 lines address other components and sub-systems in a product, such as software features, app, cloud connectivity, security, and others. Additionally, these lines often just point to a part of an organisation, giving away the responsibility of the product decision to an organisational department that has nothing to do with the customers and market of the specific product. This approach sets aside the user experience, the unique selling proposition, and Minimal Viable Product (MVP) strategies as well. The established product development process may ensure the hardware quality, but what about the rest? Remember – the user doesn’t care if the loudspeaker provides a wonderful sound quality if it takes him 10 minutes to finally play a song. How to scale connected product development With great systems comes great complexity. That does not mean that hardware specifications, architecture, and design aren’t needed anymore. It simply means that while hardware used to be the only thing to specify, now it’s just part of a larger whole. Therefore, the process must be extended and begin from this larger perspective. Effectively scaling up the product development process to handle connected products requires more than just adopting agile methodologies. While lean tools are crucial, it’s first essential to define the purpose, goals, metrics, logic, roles, dependencies, and more. Only then can the right agile approach be employed to achieve these goals. Here are a few examples of what a scaled-up process should look like: Product strategy Start with a comprehensive product strategy Begin by defining a clear product strategy that encompasses the overall product including all associated systems. Understand customer needs and involve them as early as possible. Outline the end goal and the desired user experience and workflow. Ensure that the product owner(s) consider the end-to-end product, not just the hardware component, and break it down from there. Define the market introduction in increments and plan the software release. Product specifications Define the product specifications beyond the hardware Product requirements shall describe the system as a whole, covering the functionalities, intended use, performance metrics, user interactions and more. Focus on what needs to be achieved rather than how, as it will come at a later stage. Ensure that these requirements are comprehensive and include all the necessary details to guide the development effectively. Iterate, iterate, iterate. Early identification of non-feasible, non-viable, or undesirable requirements minimises costly failures. Systems engineers Incorporate systems engineers early on Include architecture discussions in the specification phase to ensure that requirements are feasible. Systems engineers should decompose product requirements from a holistic system perspective to the design level. This process begins with high-level use cases and continues through the product’s journey, detailing the exact components that implement the solution. Systems engineers can ensure that elements of the system are designed to work together seamlessly, preventing integration issues later. Design the overall high-level architecture first and then zoom-in, instead of separating software, hardware or cloud architectures, etc. Agile methodologies Use agile methodologies Flexibility is particularly important in complex, integrated product development. The nature of hardware development is completely different to that of software and agile tools could help deal with these differences when applied appropriately. As requirements are evolving along the lifecycle of the product (as software updates hardware), agile development becomes essential. Test & validate Test & validate to ensure customer satisfaction Test the system as it’s broken down into smaller pieces, from unit testing to complete system validation. Define a test pyramid, so users will experience only improvement issues rather than quality issues. Incorporate data Incorporate data into the development process With the product being relaunched repeatedly through new software releases, development does not end with the first launch – it keeps going. Gather data, feed it back to the development process and improve the product functionalities. PDP is great but a bit outdated – it’s time for PDP 2.0 The development process of smart and connected products is fundamentally similar to the traditional product development process at a manufacturing company. However, the complexity increases, which calls for a larger scope and an extended process workflow. So, introducing end-to-end solutions and the development process of connected products is crucial for staying competitive in today’s market. Even in our daily life, the only way to know that we’ve achieved a goal is by knowing what the goal was. How could a smart and connected product be created if its end-to-end functionality is not defined? How can seamless integration be expected without clear definitions of how components should interact? The organisational setup ensures the development, but not the integration. The process must take care of that. Starting with a comprehensive product strategy, user workflow, and requirements ensures a systematic breakdown. This approach fosters innovative, state-of-the-art solutions, maintains traceability of requirements, sets clear development goals, facilitates seamless integration, enhances customer experiences, increases customer satisfaction, and more. The benefits are endless. And the icing on the cake is that it has a tremendous impact on internal employee satisfaction as well. After all, everybody likes to know which larger purpose their piece of work contributes to. Do you find connected product development challenging? We would love to hear about your experience. Reach out to us today and let’s chat about transforming the product development process for a future of smart, connected and high-performing products. Learn more
' The digital era brought new players into the development process and transformed a product into a complex system that has to integrate different software and hardware. ' Réka Leisztner Senior Consulting Manager, Zühlke Group
' A user doesn't care that the hardware works perfectly when a software part fails. Poor digital performance leads to negative experience and results in losing customers, regardless of the hardware quality. ' Réka Leisztner Senior Consulting Manager, Zühlke Group
Industrial Sector – Production innovation: the digitalization obstacles hurting innovation outcomes Learn more