Co-ordination, Specialization, and Incentives in Product Development Organization

Abstract

This chapter provides an observation about how project organizations with broad task assignments among engineers and powerful product managers (called ‘heavyweight’ product managers) achieve high levels of performances in product development. The chapter looks at the growing importance of the ‘heavyweight’ project managers in the product development organization. These days more authority concerning product concept creation tends to be delegated to product managers by top management. Project managers also control their members' incentives by exerting influence over their next assignments. Thus, they are ‘heavyweight’. On the other hand, they allow for more decentralized and lateral engineering co-ordination among their subordinates, who perform broader tasks than in the traditional organization. With the aid of recent contributions of information and incentive economics, the chapter shows how centralization and decentralization are complementary to each other under the emergent technological and marketing requirements of the new product.

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