Across industries, product-development functions are struggling to recruit and retain the talent they need. They’re encountering a perfect storm of supply-chain issues arising from the COVID-19 pandemic, the current labor mismatch, and evergreen themes of managing cost, quality, and time. Add in emerging megatrends driven by both consumers and regulators in digital, electrification, connectivity, and environmental sustainability, and there is an urgent need to add new capabilities to product-development teams.
Rather than becoming part of the much-bemoaned war for talent, companies can move ahead of competitors by developing the capabilities of their existing workforce to fill skills gaps in their product-development functions. Formal, structured programs that maximize the potential of existing engineering competencies in teams by embedding transformative behaviors and new ways of working can drive growth and recovery within the time frames the next normal demands. When implemented sustainably, they can have an outsize impact on performance, as previously discussed in our human factor blog series. However, applying new ways of working can be complex and requires forming new habits in teams through capability building and behavior change.
But it can be well worth the effort: one company developing machinery for the advanced-industries sector was able to achieve material savings in excess of 10 percent across its product line by building talent internally rather than externally.
Many companies are already considering this approach. We take regular pulse checks of product-development senior executives, and the most recent survey saw a 19 percentage-point increase in respondents who believe that capability building is integral to the long-term growth of their organization (Exhibit 1).
Additionally, the majority of respondents (53 percent) told us that they think that skill building is the most useful way to address capability gaps, ahead of hiring, talent redeployment, and contracting in skilled workers (Exhibit 2). But despite best efforts, too many capability-building programs are failing to achieve their intended business impact—as many as 67 percent of respondents aren’t getting the results they hoped for.
There is clear value in getting capability building right in product-development functions. In companies that develop physical products, stronger capabilities can help not only in optimizing customer value but also in developing the technical solutions required to deliver that value at optimum cost. And the benefits are long term. At the same machinery company, after an immersive learning journey that addressed three product systems, the company quickly scaled their efforts across a further ten product systems independently as new working methods were shared across the organization.
McKinsey’s Product Development Academy helps to build product-optimization skill sets at organizations looking to improve their performance and build stronger, more capable teams. Investment in a well-designed, formal capability-building program enables behavior change of the group that is not possible through independent learning.
By giving participants the skills to apply their existing engineering know-how in a focused and structured way, they are able to assess what customers value most and how to deliver those product features and attributes to them at the best cost level. It is applicable to new products and existing portfolios, bringing new skills and mindsets to teams about to start a product-led transformation.
Impact is achieved through dedicated attention to the principles of adult learning that allow participants to acquire new skills and apply them in a safe environment before implementing them in their daily work. They’ll see the benefits of the new way of working and sustain their newly acquired knowledge, skills, and capabilities with follow-ups and peer-driven reappraisals that help embed the new mindset and behaviors in the organization. For the advanced-industries company, training a team of more than 30 people with learning journeys individualized for their roles resulted in product-development cost savings of more than 10 percent, the creation of a new specialist team, and a shift in organizational focus toward internal capability development.
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