My first post

Going to start out with a little about my philosophy on engineering and product development. Lots of different ways to look at this, but I try to simplify it as it'll help in keeping the right kind of focus. This will be part of an ongoing series.

Primarily, engineering groups do 2 different things from a business perspective: they are needed by the company to maintain their existing revenue stream or do things to grow the revenue or operating income stream. Despite the wide range of activities done by engineering, you can pretty much put them all into one of these two categories. Most companies put the engineering team maintaining revenue into product cost overhead as that makes sense. It is often called sustaining engineering, but departments that do "engineer to order" can fall into this as well. I'll be focused mostly on new product development which creates new revenue streams as opposed to maintaining existing. These can be budgeted into lots of different areas. All companies should have both teams, but over time, some companies are left with just the sustaining aspect. The goal is getting to a right balance of sustaining and NPD.

Engineering groups are often busy with what seems like new product development efforts and would say they aren’t sustaining, but often wrong. If you’re busy making fuel gauges for the next generation of Mustang’s that Ford is releasing, you’re doing sustaining engineering. If you’re doing calculations to spec out a concrete pad your product will be installed on for earthquake loads in California, you’re doing sustaining. For the business to grow, you add more engineers doing the same calc’s. That is the filter to figure out what bucket the effort belongs.

If you’ve made an improved version of a product that replaces your current offering, you’re probably still overhead. Believe it or not, every successive iPhone is basically a next generation product. While they have grown market share and will often look at products that do this a little differently, the bottom line is Apple needs to do this to maintain their existing revenue streams. All these examples are sustaining existing revenue streams. Needed for sure, but going forward, needs to be a smaller percentage of your work each year.

Wanted to start out by describing these two different engineering efforts as it relates to a company's business. We'll get into more of the details on new product development in later posts.