Academic journal article Research-Technology Management

Leveraging Lean Principles in R&D: The Experience of the Goodyear Tire & Rubber Company Shows How Applying to Lean Principles to R&D Can Improve the Efficiency and Effectiveness of New Product Development

Academic journal article Research-Technology Management

Leveraging Lean Principles in R&D: The Experience of the Goodyear Tire & Rubber Company Shows How Applying to Lean Principles to R&D Can Improve the Efficiency and Effectiveness of New Product Development

Article excerpt

Global innovation competitiveness is the new battleground for industrial companies. High-quality new products are no longer enough--companies must also deliver new products more quickly and more frequently. Quality is no longer the primary competitive differentiator, as smaller, nimbler companies build competitive advantage based on their ability to release new products more quickly, responding to changing customer demands. As a result, launch windows narrow and those late to market capture even less revenue. In this climate, efficiency in product development becomes imperative to maintaining competitiveness.

Lean, which has been applied to cut costs and improve efficiency in many companies' manufacturing processes, offers one route to improve the efficiency and effectiveness of product development, as well. The principles of Lean have been developing for centuries, as far back as the Venetian arsenal in the 1500s (Lean Enterprise Institute 2008). Many principles were codified in the practices of Toyota and other Japanese manufacturers starting in the 1950s; these methods were introduced to the Western world and christened "Lean manufacturing" in the 1990s (Womack, Jones, and Roos 1990). For decades, Lean made inroads into production environments at companies around the world and gradually was adapted to other processes and industries, from banking to health care. But application of Lean in R&D has been rare, largely because innovation is not seen as amenable to the disciplined cost focus typical of Lean manufacturing approaches. An application of Lean for R&D would need to parse Lean principles in a new way for the innovation environment. The Goodyear Tire & Rubber Company has embarked on a journey to do just that.

In 2005, Goodyear, which is based in Akron, Ohio, faced a crisis. The company was delivering high-quality, innovative products, but it lacked a world-class R&D process to bring those products to market efficiently. Indeed, one consulting firm told Goodyear's management team that the company had no R&D process at all--each engineer seemed to work in his or her own way. An entrenched silo mentality fed a culture in which functional units--business units, R&D, manufacturing--played the system to their advantage rather than focusing on customer value. Project priority lists changed constantly, based on which function had the best arguments and argued the loudest. As a result, less than 20 percent of R&D projects were delivered to business units on time.

Today, because of a decade-long effort to apply Lean principles to its R&D processes, Goodyear gets all of its new products (about 1,500 new SKUs each year) to market when and how the market needs them; products introduced within the past three years account for more than 30 percent of the company's annual revenue. Warranty returns have dropped to an all-time low and on-time delivery of new products to customers has improved from 20 percent to 95 percent, even as the R&D budget remains flat.

The path to Lean R&D at Goodyear was not easy or without stops and starts. To inculcate Lean into the product development process, Goodyear R&D management and staff had to change their perceptions of R&D, break down functional silos that put individual objectives and functional productivity before customer value, learn how to apply existing Lean principles, and develop new ones. The result of that effort altered the company's R&D processes and provided quick, bottom-line results that allowed Lean R&D to gain a foothold and flourish.

Transforming R&D with Lean

In 2005, when a new leadership team took the reins at Goodyear, they demanded an improvement in the new product development process. The performance and quality of new products was high, but projects were routinely late and, as a result, often unable to support the business plans made for them. Backlogs of unfinished projects, many of which would come to market long after the launch window closed (if they ever arrived at all), were common. …

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