Tag Archives: Donald Reinertsen

Welcome

I’m starting Optimal Variation as a blog to record and discuss my research in progressive Product Marketing and Product Development methods.  Specifically, I’m seeking a way to reconcile the gap I see between the principals of Design Thinking and the principals of Lean Production.  Are the traditional paradigms of Product Marketing valid in this context?  I contend that they are not, and actually pose a bottleneck that hampers overall product development processes.

The name of this blog is a deviation from a concept in Donald Reinertsen’s excellent book “The Principals of Product Development Flow: Second Generation Lean Product Development“.  Reinertsen introduces the importance of variability in the product development process:

Let’s start by examining the economic role of product development variability. Product development creates economic value by producing the recipes for products, information, not by creating physical products. If we create the same recipe twice, we’ve created no new information, and consequently, no economic value. If we wish to create value, it is necessary, but not sufficient, to change the design. But changing the design introduces uncertainty in outcomes. In fact, we must introduce uncertainty to add value in product development. Risk-taking is central to value creation in product development. Risk-taking plays no equivalent role in manufacturing processes. We can manufacture the same product one million times, and we will create value every time. For a manufacturer, reducing variability always improves manufacturing economics. This is not true in product development. In product development, we must carefully distinguish between variability that increases economic value and variability that decreases it. Rather than eliminating all variability, we must actively put it to work to create economic value.

Reinertsen, Donald G. (2012-03-29). The Principles of Product Development Flow: Second Generation Lean Product Development (p. 86). Celeritas Publishing. Kindle Edition.

Reinertsen subsequently introduces the concept of “optimum variability“:

The Principle of Optimum Variability: Variability should neither be minimized nor maximized. Higher variability can create higher economic values, but we should remember that this value is not created by the variability, but by the way the variability is transformed by the asymmetry of the economic payoff-function. Simplistic notions like “eliminate variability,” or “celebrate variability,” miss the central economic argument. Variability is not intrinsically desirable or undesirable. Variability is only desirable when it increases economic value.

Reinertsen, Donald G. (2012-03-29). The Principles of Product Development Flow: Second Generation Lean Product Development (p. 91). Celeritas Publishing. Kindle Edition.

I quite purposely translated Reinertsen’s “variability” into “variation”:  In my mind, “variability” in product development (which produces strong positive payoffs) ultimately translates into “variations” available to serve the desires of end customers.  Customers don’t want variability; but they do want variations tailored to their precise needs.