Companies are realizing that traditional textbook front-end processes are not well-suited to today's development environment. (View Highlight)

It is useful to think of the FFE as a precursor to a betting process. At the end of the FFE we will put our investment in product development at risk in return for a chance to earn profits. From an economic perspective, the purpose of the FFE is to alter the economic terms of the bets that we place on product development. (View Highlight)

We can achieve optimization by identifying measures of performance for the FFE and then assessing how changes in these measures affect profits. (View Highlight)

we can define three key measures of performance for it: • The expense to screen an opportunity. • The time to screen an opportunity. • The effectiveness of the screening process. (View Highlight)

Once we understand our Front End economics we can consider optimizing them. For example, consider the economic effect of doubling the performance of each of the key measures of performance. Doubling the effectiveness of our rejection of bad ideas would permit us to invest in one bad idea instead of two, saving $200,000. Doubling the efficiency with which we screen ideas would cut our screening expense in half, saving $375,000. Doubling the speed on the Front End process would cut our processing time in half, saving $3.0 million. (View Highlight)

The key value in taking a quantitative view of FFE design is that it leads us to making better process design decisions. (View Highlight)

1. *Required success rate for new product development.--*Year after year, studies lament the low success rate for new product development. Only 1 out of 3,000 new product ideas succeed (5). Some observers conclude that this means that 99.97 percent of the money that they spend on product development is wasted, and maintain that higher success rates are desirable. Such views display a poor understanding of product development economics. In reality, unsuccessful product ideas usually consume a small portion of development spending because most failures are screened out before heavy investment is applied. (View Highlight)

2. *Number of filters.--*Some observers note that many new products fail and conclude that adding extra filtering stages is the answer. They layer more and more screening criteria to ensure that nothing "bad" gets through. In fact, an additional filter should only be added when its benefits exceed its costs. (View Highlight)

3. *Layout of the filters.--*There are two possible ways to structure a series of filters in our front-end process: we can place them sequentially or we can run screening processes in parallel. (View Highlight)

4. *Sequence of filters.--*Some companies think that the sequence of filtering steps should be the same for all projects. Figure 6 illustrates the economic effects of sequencing filters in two different ways. In general, the filters that are cheapest (in time and expense dollars) and those that reject the most opportunities, should be sequenced first. (View Highlight)