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Managing Experimentation in the Design of New Products

Author

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  • Stefan H. Thomke

    (Technology and Operations Management, Harvard Business School, Soldiers Field Road, Boston, Massachusetts 02163)

Abstract

Experimentation, a form of problem-solving, is a fundamental innovation activity and accounts for a significant part of total innovation cost and time. In many fields, the economics of experimentation are being radically affected by the use of new and greatly improved versions of methods such as computer simulation, mass screening, and rapid prototyping. This paper shows that a given experiment (and the related trial and error learning) can be conducted in different "modes" (e.g., computer simulation and rapid prototyping) and that users will find it economical to optimize the switching between these modes as to reduce total product development cost and time. The findings are confirmed by a large-scale empirical study of the experimentation process in the design of integrated circuits containing either (1) electrically programmable logic devices (EPLDs); or (2) application-specific integrated circuits (ASICs). In comparing their different experimentation strategies for analogous design projects, I found that the former (EPLD)---an approach that utilizes many prototype iterations---outperformed the latter (ASIC) by factor of 2.2 (in person-months) and over 43 percent of that difference can be attributed to differences in experimentation strategies. The implications for managerial practice and theory are discussed and suggestions for further research undertakings are provided.

Suggested Citation

  • Stefan H. Thomke, 1998. "Managing Experimentation in the Design of New Products," Management Science, INFORMS, vol. 44(6), pages 743-762, June.
  • Handle: RePEc:inm:ormnsc:v:44:y:1998:i:6:p:743-762
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    File URL: http://dx.doi.org/10.1287/mnsc.44.6.743
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    References listed on IDEAS

    as
    1. Robert P. Smith & Steven D. Eppinger, 1997. "A Predictive Model of Sequential Iteration in Engineering Design," Management Science, INFORMS, vol. 43(8), pages 1104-1120, August.
    2. Roger E. Bohn, 1995. "Noise and Learning in Semiconductor Manufacturing," Management Science, INFORMS, vol. 41(1), pages 31-42, January.
    3. Eric von Hippel, 1994. ""Sticky Information" and the Locus of Problem Solving: Implications for Innovation," Management Science, INFORMS, vol. 40(4), pages 429-439, April.
    4. Herbert A. Simon, 1955. "A Behavioral Model of Rational Choice," The Quarterly Journal of Economics, Oxford University Press, vol. 69(1), pages 99-118.
    5. Paul S. Adler & Kim B. Clark, 1991. "Behind the Learning Curve: A Sketch of the Learning Process," Management Science, INFORMS, vol. 37(3), pages 267-281, March.
    6. Thomke, Stefan H., 1997. "The role of flexibility in the development of new products: An empirical study," Research Policy, Elsevier, vol. 26(1), pages 105-119, March.
    7. Thomke, Stefan & von Hippel, Eric & Franke, Roland, 1998. "Modes of experimentation: an innovation process--and competitive--variable," Research Policy, Elsevier, vol. 27(3), pages 315-332, July.
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