Since the emergence of product digitalisation, many leading manufacturing companies have faced enormous challenges in transforming and revolutionising their product management and R&D processes to adapt to the new era. Ultimately, the goal is to create physical products that seamlessly integrate digital experiences and services, providing end-to-end solutions to customers. This isn’t always an easy undertaking.

While various great approaches – such as agile, scrum, design thinking, and the adoption of new tools – have been introduced to address this challenge, they alone do not drive the profound mindset that transformation needed to create smart and connected products. This raises a critical question, what would?

In this article, we try to answer this question and illustrate the way to a seamless device experience.

Organisations that were market leaders before the digital era had a very well-designed development process that guaranteed exceptional quality, outstanding product performance, and fast time-to-market. Market launches occurred every couple of years, allowing engineers ample time to develop and test the hardware.  These products were eventually launched on a specific date, when they reached perfection, and remained on the market for years. During this time, software development was only a delivery centre, enabling already developed hardware capabilities, but software alone was not seen as value creator or differentiating factor.

However, this landscape has dramatically shifted. Although, the integration of software into physical devices has been around for decades, it supported only the hardware to work. The introduction of different interfaces, connectivity, services, third-party software, machine learning, AI, data storage, you name it… changed the paradigm. Now, product “launch” and “revenue creation” no longer solely depend on new hardware at a company. The continuous evolution and release of different software services updates hardware capabilities, as they together form The Product as one entity. With hardware, software, and all other supporting components, a product became a complex system which can’t be looked at only from the hardware perspective, simply adding everything on later. 

This transformation brings new business models and enables physical devices to stay on the market longer, facilitating recurring revenue and the creation of more sustainable products. On the other hand, it also changes the rules of the game by introducing two critical factors:

• The ultimate differentiating factor and competitive advantage, called customer experience.
• The driver for growth and innovation, called data.

Looking back at the product development process (PDP) that once guaranteed success, it is essential to ask, do the current processes and mindsets truly consider the extended software focus? Is software, and other attached sub-systems, recognised as a core element of the strategy or is it still treated as a peripheral component that supports the hardware?

In other words, is it still correct to focus on the hardware development process and separate the software at the start of product creation?

We believe it’s not and here is why:

Let’s put ourselves in our customer’s shoes and consider an example of the world’s leading loudspeaker brand that’s known for its outstanding and best-in-class sound quality. Suppose this company recently released a smart speaker that can be controlled through your voice and an app, fully compatible with major streaming services, and offers an automatic equalisation adjustment for optimal sound based on the current song.

The user begins using the product and it delivers the expected incredible sound quality.  So, the user keeps using it on a daily basis and soon experiences connectivity issues – the voice command often doesn’t work and the app use is so frustrating that it makes them want to hit it against the wall. What could be the user’s conclusion?

It’s probably easy to see the more likely scenario.

Customers don’t differentiate between hardware, software, sensors, or gateways when evaluating a product. They only care about the product as a complete solution and the value it creates. If the app fails for instance, the customers will never point to John, the Head of App Development, and ask why it’s not working. They will point to the company as a whole because in their eyes the entire product has failed.

But how is this relevant for development processes? 

The key to successful product development of digital, smart, or connected products lies in viewing the product as a system and this system requires owners. Rather than exclusively specifying the hardware and treating software related elements as a secondary requirement, the product should be considered holistically from the strategic phase. This view is the game-changing element.

So, let’s look at this more closely.

You might be heard of the term 'systems thinking' in various context. And as much as it is valuable concept in many field, product development strives to be counted among them.

Thinking in end solutions and systems in development context is a whole new mindset to define, design and develop a product with complete transparency and traceability from the overall system decomposed to the smallest component. It is the mentality of 'if I work on this element, it will impact the overall system functionality'. While this may sound complicated, it does not have to be. Traditional organisational structures are not built to deliver system integration, as they often operate in silos. This isn’t a problem per se; silos can have their rights and purposes. However, the more important question is whether these silos are supporting each other with data, metrics, and processes to develop systems. The goal is not to reshape an established organisation based on how a customer experiences the product. Instead, the focus should be on ensuring that the operating model delivers value through integrated system functions rather than isolated components. 

So, should you involve more systems engineers from now on? Absolutely, we will get there… but let’s take a few steps back and establish a setup where systems engineers have the content to work from – the operating model for integrated solutions.
 

What could go wrong with the loudspeaker? There are tons of possibilities that create such a product failure. If we look into the latest reports of digitalisation and smart connected development, some of the emerging problems are the complexity of understanding customers, defining the product, and ensuring security and compliance. 

Requirements are as subjective as taste or opinions and can have as many layers as a century-old tree. While it is easy to say, 'we need requirements', it is crucial to specify exactly what that means, who will define them, on which layer, when they should be developed and how to document them. This process must be engineered from top-down to bottom-up.

Here lies a common issue within and between organisations – hardware-focus instead of solution-focus. Product requirements are often very detailed, consisting of a list of thousands of lines. However, a closer look clearly shows these well-prepared requirements focus primarily on hardware. Only a few, precious 2-3 lines address other components and sub-systems in a product, such as software features, app, cloud connectivity, security, and others.

Additionally, these lines often just point to a part of an organisation, giving away the responsibility of the product decision to an organisational department that has nothing to do with the customers and market of the specific product. This approach sets aside the user experience, the unique selling proposition, and Minimal Viable Product (MVP) strategies as well.  The established product development process may ensure the hardware quality, but what about the rest? Remember – the user doesn’t care if the loudspeaker provides a wonderful sound quality if it takes him 10 minutes to finally play a song.

The development process of smart and connected products is fundamentally similar to the traditional product development process at a manufacturing company. However, the complexity increases, which calls for a larger scope and an extended process workflow. So, introducing end-to-end solutions and the development process of connected products is crucial for staying competitive in today’s market. 

Even in our daily life, the only way to know that we’ve achieved a goal is by knowing what the goal was. How could a smart and connected product be created if its end-to-end functionality is not defined? How can seamless integration be expected without clear definitions of how components should interact? 

The organisational setup ensures the development, but not the integration. The process must take care of that. Starting with a comprehensive product strategy, user workflow, and requirements ensures a systematic breakdown. This approach fosters innovative, state-of-the-art solutions, maintains traceability of requirements, sets clear development goals, facilitates seamless integration, enhances customer experiences, increases customer satisfaction, and more. The benefits are endless. And the icing on the cake is that it has a tremendous impact on internal employee satisfaction as well. After all, everybody likes to know which larger purpose their piece of work contributes to.