Lecture07 vo customer

Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved.For academic use only. 1
MGT610
Lecture 7
Stakeholder Perspective:
Identifying Needs for Requirement Definition

Project Value Network
Shareholder
Value
Outcome
Value
Stakeholder
Value
Effort
Value
Project
Scorecar
d
Statistical
Project
Control
Stakeholde
r
Deploymen
t
What we control in the effort should deploy outcomes that reflect where we expect
to find the project’s value as described in the project’s scorecard.

The Tree Swing Problem
what marketing
suggested
what management
approved
as designed by
engineers
what was
manufactured
as maintenance
installed it
What customers
wanted

Topics and Objectives
• Strategic Thinking: Understanding stakeholder
perceptions about the project’s value
• Filters in the PVN: How will we organize the
stakeholders into segments having compatible
views about value?
• Constancy of Purpose: Understanding
comparative advantage as stable needs having
dynamic tolerances
• Stakeholder Schematics: Coordinating
comparative advantage as a horizontal chain
of value

Session Agenda
Stakeholder Perspective:
Identifying Needs for Requirement Definition
1. Perceptions of value lead to expectations
2. Compatibility of expectations as segmentation basis
3. Stable needs but dynamic expectations
4. Describing expectation as a tolerance

The Fundamental Challenge in Project Management:
Maximizing Project Value by Managing Satisfaction
“If I had to reduce my message for management to just a few words, I'd say it all
had to do with reducing variation”
—W. Edwards Deming
“The central problem of management in all its aspects...is to understand better the
meaning of variation, and to extract the information contained in variation.”
—Lloyd S. Nelson
Maximize
Project
Value
Prerequisite
Maximize
Inflow
RequirementObjective
Minimize
Outflow
Minimum Required-
ALAP
Maximum Desired-
AFAP

Framework of 7 Basic Questions for the PVS

Change
of Goals
Stakeholder Satisfaction: Impact of Dissatisfaction
PM barriers:
Conflicts and Goal Changes have
Strong negative effects on project
success
One major source of variation:
Conflicting and Changing
Stakeholder Satisfaction
Strategy:
Avoid changes by identifying
stakeholder needs
Conflicts
Success
+.41
-.21
-.20
R2= 39%

Stakeholder Satisfaction and Market Value
1999 Macpherson Publishing, Alexandra, New Zealand
From an article by Steve Hoisington of IBM Rochester.

Stakeholder Satisfaction: Quality Problems & Repurchase
Decision
87
50
74
45
83
53
83
53
0
20
40
60
80
100
Automotive
Service
Financial
Services
Packaged
Goods
High Tech
Equipment
No Problem Problem
%WillingtoRepurchase
Source: J. Goodman, “Measuring and Quantifying the Market Payoff of Improved Quality and Service,”Quest
for Excellence IV Conference, February 4, 1992.

Proportion of unhappy customers who will repurchase
(Complaints valued at over $100)
Source: J. A. Goodman and D. S. Ward in Direct Marketing (December, 1993).
Did Not Complain
Complaints Not
Resolved
Complaints
Resolved
Complaints
Resolved Quickly
37%
46%
70%
95%

What is your percentage of dissatisfied customers?
– Only 4 out of 100 dissatisfied customers complain!
– Each dissatisfied customer tells 8 to10 people about
his/her dissatisfaction
Market Impact?
– 1000 reported customer complaints are approximately
25,000 dissatisfied customers!
– 25,000 dissatisfied customers are expected to
communicate their dissatisfaction to approximately
225,000 people!

Creating Stakeholder Value
• Customers buy on value. Value as an advantage is
determined by comparing quality relative to price.
– Quality includes all the non-price attributes that count in the
purchase decision--both product and service.
– Value (price and quality) is not an absolute expectation. It leads
to expectations which can be expressed as tolerances relative to
stakeholders’ perceptions about what is possible.
Value
Quality
Price
Product
Service
Initial Price
Life Cycle Costs

Stakeholder Value by Accident

Traditional QFD: Definition
QFD (Quality Function Deployment):
• Is a detailed system for translating the needs
and wishes of the consumer into design
requirements for products or services.
– Developed in Japan by Dr. Yoji Akao and Dr. Shigeru
Mizuno
– Purpose: assure customer satisfaction
– Primary concept: value
– Tools: 7 management & planning tools

QFD Advantages
QFD has fewer engineering changes and adjustments!
NumberofChanges
Time
Traditional
Development
QDF
Development
1st Day of
Production Adapted from Sullivan, 1996

Applying QFD: The Strategic Decision
Allocation of Resources
QFD requires substantial initial investments
vs.
Traditional management requires increasing
investments
Resources
Time
Traditional
QDF

QFD Advantages
• Shorter development time (30% - 50%)
• Fewer engineering changes (25% - 50%)
• Reduced introduction costs
• Satisfaction of consumer needs and desires
• Improved product manufacturability
• Commonality of language
• Development of a ready reference for the future

QFD Goals
• Increase market share
• Design value into the product
• Translate subjective statements into objective
requirements

QFD Development Process Steps
Identify the Market
Select a Product Concept
Design Product
Design Manufacturing
Prioritize Customer Segments
Understand Customer Needs
And Context, Translate into
Engineering Language
Select the Best Concept
Generate New Concepts
Target Cost
Prioritize Development Projects
Establish Targets
Establish Relationships between
Manufacturing Conditions and
Product Performance

Decomposition of
Needs into
Tolerances and
Operating Limits
Quantifies the
Acceptable
Comparative
Advantage. text
Product
Planning
Needs
Design
Targets
Feature
Deployment
Design
Targets
Feature
Specs
Workflow
Planning
Feature
Specs
Process
Tolerances
Work
Package
Planning
Process
Tolerances
Operating
Limits
If
New, Important, or Difficult,
Then
Define
Else
Defer Effort Until Required
Focusing Criteria
Needs
Design Targets
Feature Specs
Process Tolerances
Operating Limits
Need Hierarchy
Outputs are caused by tasks.
Value-added tasks should:
• Change the output
• Solve a need by meeting
design targets.
design for
deployment
of best
comparative
advantage
Using a modified QFD
framework,
• Plan the product.
• Plan the workflow.

Stakeholder Management
To avoid goal changes and dissatisfied customers?
1. Plan and implement customer value by creating
output value
2. Apply QFD concepts at the project level
3. Manage customer satisfaction during the project
4. Manage the customer relationships

Simplified Need Identification: Definitions
Needs:
Necessity, a condition in which something necessary or desirable is
required or wanted; a requirement.
Expectations:
The condition of looking forward to something
Specifications:
A detailed description of design criteria for a piece of work
Requirements:
Something that is required; a necessity; A requirement is a singular
documented need of what a particular product or service should
be or do.
Functional requirements - Describe system features or things the
system must do.
Non-functional requirements - Describe properties the system must
have (e.g. performance, availability, accessibility).
Constraints - Limits the development in some way.

Simplified Need Identification: Need Definition
A need is:
• a condition requiring relief;
• anything that is necessary but lacking;
• necessitate: require as useful, just, or proper;
• a want: have need of …

Simplified Need Identification: Categories of Need
Customer satisfaction is influenced
by a variety of needs.
Undocumented
Needs
Documented
Needs
Necessary
Satisfiers
Desirable
Satisfiers
Customs &
Hidden
Motivators
Exciters
Regulations,
Specs, &
Standards
Negotiating
Positions

Simplified Need Identification: Customer Voice
Satisfiers Moments of Truth Expectations
Broad aspect of need.
When experience
is compared with
expectation, opinion of
satisfaction is formed.
The tolerance expressed as
central tendency and
dispersion.
One-word label. How
customer talks about
satisfaction.
Names comparison
opportunity as an event.
Tolerance sets the
acceptable uncertainty for
outcomes and effort.
I want … When I …, I expect …
convenience. go shopping,
to drive 5 to 15 minutes to
find a shopping center.

Simplified Need Identification: Customer Voice
I want … When I hear about …, I expect …
Accuracy.
the construction process used
to build the house,
USL = 150 days,
LSL = 30 days,
Target = 90 days to
complete construction.
Reliability.
the process used for curing the
concrete foundation,
USL = 12 days,
LSL = 2 days,
Target = 7 days to cure.
When the house is built in under 3 hours,
• I perceive the accuracy of construction to be …?
When the concrete is pronounced cured in 20 minutes,
• I perceive its reliability to be …?
I perceive …
• Fear,
• Uncertainty,
• Doubt …

Exercise: Simplified QFD for the 4-Hour House
I expect …When I …,I want …
ExpectationsMoments of TruthSatisfiers

Understand Need: Simplified QFD Information
Broad aspect of
need.
When experience
is compared with
Tolerance for variation
expressed as central
tendency and dispersion.
One-word label.
How customer talks
about satisfaction.
Names comparison
opportunity as an
event.
Tolerance sets the
maintainability. redecorate the house,
to spend $0 to $1,000 for
repair problems.
Example: The 4-Hour House should be easy to maintain.
Ambiguous attribute of satisfier;
must translate into hard expectation.
Soft Expectation
Measurable attribute of a satisfier;
a performance benchmark. If met,
should lead to satisfaction.
Hard Expectation

Simplified QFD Information
Broad aspect of
need.
When experience
is compared with
The tolerance expressed
as central tendency and
dispersion.
One-word label.
How customer talks
about satisfaction.
Names comparison
opportunity as an
event.
Tolerance sets the
size.
learn about the
available living space,
to find 2,400 sq. ft. +/-
200 sq. ft. of useable
living space in the house.
Example: The house should be of sufficient size.

Project QFD: Essential Chain
critical chain essential path
QFD is the theoretical foundation for project QFD:
– critical chain — best basis for managing schedule
– essential path — best basis for managing value
Delivering value to customers is the prime directive for project
managers of product development projects

Appendix

Appendix: Analyzing Stakeholder Data
7 TQM Management & Planning Tools

Appendix: Quantifying Acceptable Variation using SPC Concepts
LQL: Limiting Quality Level for rate of nonconformances which can be
tolerated by the stakeholder’s workflow.
AQL: Level of nonconformances expected out of the effort’s workflow.

Cp and Cpk Describe the Balance in Acceptable Uncertainty
LCL UCL
µ-1σ-2σ-3σ +1σ +2σ +3σ
Inherent Capability if Cp = 1.0 = Cpk
LSL USL
Tolerance
{x|x = LSL ≤ x ≤ USL}
{x|x = LCL ≤ x ≤ UCL}
Inherent Capability = Tolerance Tolerance = 2 * Inherent Capability
LCL UCL
Tolerance
LSL USL
µ +1σ +2σ +3σ-1σ-2σ-3σ +4σ-4σ-5σ-6σ +5σ +6σ
Tolerance = 1.33 * Inherent Capability
LCL UCL
Tolerance
LSL USL
µ +1σ +2σ +3σ-1σ-2σ-3σ +4σ-4σ
Minimum for 6-sigma Quality
Inherent Capability if Cp = 2.0; Cpk ≥ 1.5
Tolerance
LSL USL
+1σ +2σ +3σ-1σ-2σ-3σ +4σ-4σ-5σ-6σ +5σ +6σ
µ
LCL UCL

Lecture07 vo customer

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