Global Product Development Teams

Global Product Development Teams

Introduction

There is a growing trend among companies to develop new products by tapping into expertise and resources in multiple countries, both within and outside their own firms. Realizing that products may be designed with the world market in mind, (Not just a region, or National markets) companies like Intel, TI, IBM, HP, Oracle, Microsoft, Pfizer, Nestle, P&G etc. are bringing personnel together, physically and/or electronically, from distant sites into global new product development teams. This global teams are a relatively new phenomenon, constituting the next wave of corporate development. A recent survey of firms found that nearly 75% are using global teams for a range of tasks, and almost two-thirds claim these teams have led to innovations in product and service offerings. Some major trends which contribute to the growing use of global teams are:

	Increasing cost of new product development, thus favoring spreading innovation costs among several business units.
	Shortening new product life cycles which is forcing companies to introduce innovations faster and better
	Rising technological competencies in countries outside the traditional triad. India is now the second largest exporter of software programs .
	Increasing complexity of new products causing firms to source expertise from subsidiaries, suppliers, and strategic partners
	Rising use of global or shared product platforms to reduce product design, factory retooling, and materials sourcing costs.
	Improved Information technology easing cross-national, inter- and intra-company communications and collaboration

Global new product teams are typically cross-functional, commissioned to design and launch new products, and face significant budget, time, and other resource constraints. However, global teams are distinct in that members usually come from a range of countries and cultures. Values, orientations, and assumptions may radically differ among members. Also, members may not be equally comfortable in the chosen lingua franca, typically English. As a consequence, misunderstandings and conflicts easily arise, impeding work and threatening outcomes In some cases, communications are made even more difficult because members are dispersed across several continents, meeting face to face only periodically.

Given the complex nature and tasks of global teams, managers and leaders alike may be interested in knowing how to design these groups, i.e. assemble the right individuals, so that the national cultures represented are synergistic and constructive rather than debilitating and unproductive. Culturally diverse groups have the potential for greater levels of creativity and problem solving than homogeneous groups, but how can this potential be tapped for new product development? The purpose of this article is to address this issue by exploring a method of designing Global product development teams so that the effects of national culture on team performance are optimized.

New product development is defined as the process of conceiving, creating, and launching a product new to the company, a market, or the world. The key phases in this process are "initiation", which covers idea generation, screening, and concept testing, and "implementation", which includes product design, test marketing, and market introduction.

Current Understanding

Current understanding of global new product teams is largely anecdotal. Companies using this emerging work form, such as Texas Instrument, Hewlett Packard, Intel, etc. have been reported by the business press.

Most articles outline salient characteristics of Global Teams, their reliance on electronic tools for communications, correspondence with distributed R&D and design centers, exploitation of geographically distributed human resources, and rising use by companies wanting products for worldwide markets. Several conclusions were drawn from this:

	Global Teams can be an efficient and effective means of developing new products and conducting other complex tasks. New product teams are involved in non-repetitive tasks and draw on knowledge and judgment from different disciplines and functional units, such as marketing, engineering, finance, and manufacturing. Because of their capacity to tap into specialized expertise and perform multiple activities simultaneously, they save time and enhance overall project success.
	Global Teams enhance the quality of new product development, particularly when they are focused on one project at time, have frequent update meetings, communicate efficiently with other parties, use a defined and accountable leader, are given clear project responsibility, and are composed of dedicated, assigned members.
	Teams in general - whether devoted to developing new products or improving quality on the assembly line - improve overall organizational performance based on a range of cost, efficiency, quality, participation, worker and customer satisfaction, and productivity measures.
	Team composition affects new product success. Empirical evidence shows that the composition of new product teams affects project success. Composition - the collective attributes of members - influences the information, resources, and problem-solving style of new product teams, which in turn ultimately impacts on group performance (e.g. speed and productivity). However, research on new product team compositions has been limited to the attributes of tenure, function, and gate-keeping - in other words, national culture has yet to be investigated. New product teams that are more cross-functional, have members of moderate tenure, and incorporate active gatekeepers are known to be most effective. It is also recognized that composition is a key determinant of decision making in and performance of product development teams.
	Cultural values impact on team performance. The majority of empirical studies on group efficacy have been conducted within a single culture. Consequently, there is limited understanding about the role of national culture per se on group, much less new product team, processes and performance. The few comparative, cross-cultural studies suggest that cultural values, in particular individualism-collectivism, significantly influence group dynamics and results. Dr. Earley compared managers from the USA and the People’s Republic of China on a series of individual and group tasks, and determined that, consistent with their dominant cultural value of individualism, American managers were more apt to engage in social loafing than their collectivist Chinese counterparts in group exercises. In another study, Dr. Earley examined the group behaviors of American, mainland Chinese, and Israeli managers, and found that, as hypothesized, Americans performed best when working individually, whereas the Chinese and Israelis did best in in-groups rather than alone or in an out-group context. Dr. Erez and Somech studied the individual and group behaviors of mid-level Israeli managers from kibbutz versus urban backgrounds. The researchers concluded that group performance suffered less in the collectivist kibbutz groups than the individualistic urban groups.
	Cultural heterogeneity positively and negatively affects teams. Cultural heterogeneity refers to the variance or diversity of national cultural values within a group. It is generally believed that heterogeneity is a two-edged sword, generating both benefits and liabilities for groups compared to cultural homogeneity. Since greater heterogeneity means that a wider range of beliefs, attitudes, behaviors, perceptions, skills, and motivations exist, conflict, turnover, communications breakdowns, and unproductiveness are more likely. Homogeneous teams have the advantages of shared assumptions and work processes, making for greater efficiency. On the other hand, it also believed that heterogeneity generates more and better ideas. Divergent views lead to multiple solutions for a single problem, avoiding the pitfalls of group-think. Diversity serves teams well when they are charged with cognitive, creativity demanding tasks, but may be impeding for more routine activities. Studies conducted on culturally heterogeneous and homogeneous groups found that overall performance was still equal between the two, but the heterogeneous groups generated a larger number and more diverse set of solutions than the homogeneous groups.

The specific question of how to design global product development teams so that national culture enhances new product development success has to be addressed. Companies that are increasingly global desire guidance in configuring the teams so that members’ cultural strengths are drawn upon and cultural weaknesses minimized. National culture is said to impact on new product development, and does so via specific cultural values that facilitate or impede the different phases of development.

Selecting Global team members

Global product development team is a relatively new work form that is being adopted by multinational firms and strategic alliances interested in tapping into geographically distributed expertise and resources. Telecommunications advances, the growth of global markets, and rising technical competencies outside the triad are just a few of the reasons businesses are looking to global teams to produce the next generation of innovations.

Developing an optimal culture-based team composition depends on two factors:

National Culture & its dimensions:
National culture is defined as the "collective programming of the mind" distinguishing members of one nation-state from those of another. The collective programming is manifest as a set of values, which are universally present but vary in intensity by country. The values, which were identified by Hofstede, are "individualism", "uncertainty avoidance", "masculinity", "power distance" and "long-term orientation".

Phases of product development:
New product development is defined as the process of conceiving, creating, and launching a product new to the company, to the local or global market. The key phases in this process are "initiation", which covers idea generation, screening, and concept testing, and "implementation", which includes product design, test marketing, and market introduction. These two stages are also referred to as the "front end" and "back end".

The relative importance of the two stages, which differ for any given project and depends on the newness of the product to be developed. Product newness is recognized as a determinant of innovation project outcomes. Products can be placed on a continuum of newness. On one end of that spectrum are products called radical innovations, which are new to both the firm and market. These products often involve emerging technologies, and can create entirely new categories or industries. Here initiation may be more important than implementation, since it is critical to conceive the right, breakthrough concept, ensuring the end product succeeds.

Culture dimensions may differentially impact on the two stages of development and thereby overall new product development success. For example, high degrees of individualism may facilitate the initiation step. At this stage there is a need to generate a wide range of alternative product concepts, and the greater creativity and entrepreneurism that often accompany high levels of individualism may be particularly helpful. However, high individualism may be counterproductive during implementation, when plans have been finalized and the team is rapidly working toward market introduction. At this phase, new concepts or approaches to product development cannot be introduced without seriously jeopardizing budgets, schedules, and company commitments. Instead there is a need for unified, cohesive, and well-orchestrated movement toward product launch. Low levels of individualism, i.e. collectivism, may be far more helpful.

Therefore, the potentially differing effects of culture factors on the two distinct stages of new product development are important to consider. Figure below illustrates the importance of national cultural dimensions on product development.

Closing Thoughts

Global product development teams is relatively a new concept. This article explains the major cultural factors to be considered while choosing the composition of the global, multi-national, multi-cultural teams for product development. While there is no easy way to decide on the final team composition, knowledge on the cultural dimensions and its impact on different stages of projects will help managers in making the final decision.

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