Tips for Successful Joint Product Development with Customers

In my last post I began discussing the advantages and disadvantages that should be considered by manufacturers when they contemplate a joint development arrangement with one of their customers.  Assuming some sort of joint development project with a customer makes sense here are some simple suggestions for making sure that the project has the greatest likelihood of success:

  1. The manufacturer should be prepared, and eager, to open up its day-to-day operational activities to the customer and provide the customer with an opportunity to carefully scrutinize and evaluate the way in which the manufacturer approaches each key issue in the development process.  For example, the manufacturer should show the customer each of the steps that are taken in order to ensure an adequate level of quality control during the manufacturing process in order to build trust with the customer and provide the customer with a chance to suggest improvements.
  2. Both parties should come up with ways to assist the manufacturer in gaining a better understanding of the challenges that the customer faces when attempting to market and sell its finished products, including the products that are being jointly developed.  Representatives of the manufacturer might accompany the customer on visits to end users of the customer’s products.  In fact, this sort of due diligence is best done well before the specific goals and objectives of the joint development project have been established since the knowledge gained might lead to unexpected and highly innovative ideas about what might be done by the manufacturer.
  3. The level of integration and collaboration between the parties (i.e., just how “joint” the development process will be) must be aligned with the risk, complexity and expense of the chosen project.  Challenging joint development projects that are focused on developing new products and technology, as opposed to creating features that amount to relatively minor enhancements and improvements to something that has already been conceived, must be supported by frequent interaction and communication with customer representatives including ongoing feedback that ensures that the manufacturer remains on the right track and that the customer will be satisfied with its investment.
  4. A real serious attempt should be made to develop two-way communication between the manufacturer and the customer that encourages and facilities the continuous exchange of ideas between the parties even when there is no current project underway.  For example, if the manufacturer learns of an idea that it thinks might interest the customer the manufacturer should share the thoughts with the customer even if the communication has not been solicited.  While the customer may not be interested in the specific idea it may lead to something different that eventually becomes a solid concept for formal joint development planning.
  5. Intellectual property rights that will be used in and/or created by the joint development project should be identified in advance and clear rules should be established for allocation ownership and usage rights for such intellectual property.  The manufacturer should be mindful of the risks associated with sharing its proprietary technologies that serve as the foundation for its core competencies.
  6. Each side of the relationship—manufacturer and customer—should actively build and maintain a team of dedicated and enthusiastic scientists, engineers and marketers that remain committed to joint development activities for as long as the parties are willing and able to formally collaborate.  Many joint development agreements include an undertaking to establish a new project review committee with representatives from both sides that will be periodically to vet and approve new development projects and discuss the overall progress of the relationship.  Whenever a project is underway both parties should be required to appoint project managers, engineers and other skilled professionals who will be allowed to invest the necessary time and effort outside of their other responsibilities to ensure that the project is successful.  The team members from each side should regularly visit with their colleagues at the other party.  For example, representatives from the manufacturer should visit the customer to learn more about how products under development will be used and/or marketed by the customer.  In turn, customer representatives should go to the manufacturer’s facilities to conduct tests on new products while they are a “work-in-progress” so that the manufacturer can receive timely and thorough feedback on product quality and performance.

The content in this post has been adapted from material that will appear in Joint Ventures and Strategic Alliances (2008) and is presented with permission of Thomson/West.  Copyright 2008 Thomson/West.  For more information or to order call 1-800-762-5272.

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