Sloan School of Management Massachusetts

Institute of Technology

Cambridge, MA USA 02142
Forthcoming in: The California Management Review

Work reported here was supported by the MIT Center for Innovation in Product Development

under NSF Cooperative Agreement Number EEC-9529140 .

For more information on the research program that generated this paper, visit http://web.mit.edu/nelsonr/www/

1. MIT Sloan School of Management, E53-339, Cambridge, MA USA 02142. Phone 617-258-6889; Fax: 617-258-7579; nelsonr@mit.edu

2. MIT Sloan School of Management, E53-358A, Cambridge, MA USA 02142. Phone 617-258-5585; Fax: 617-258-7579; palomar@mit.edu

3. MIT Sloan School of Management, E53-364, Cambridge, MA USA 02142. Phone 617-253-6638; Fax: 617-258-7579; lblack@mit.edu

Abstract

One of the most common syndromes in product development is the unplanned allocation of resources to fix problems discovered late in a product's development cycle or firefighting. While it has been widely criticized in both the popular and scholarly literature, fire fighting is a common occurrence in most product development organizations. In this paper we try to answer three questions: (1) why does firefighting exist; (2) why does firefighting persist; and (3) what can managers do about it? The most important result of our studies is that product development systems have a tipping point. In models of infectious diseases, the tipping point represents the threshold of infections beyond which a disease becomes an epidemic. Similarly, in product development systems there exists a threshold for problem-solving activity that, when crossed, causes firefighting to spread rapidly from a few isolated projects to the entire development system. Our analysis also shows that the location of the tipping point, and therefore the susceptibility of the system to the firefighting phenomenon, is determined by resource utilization in steady state. Taken together, these insights suggest that many of the current methods for aggregate resource planning are insufficient and that managers wishing to avoid the firefighting dynamic must rethink their approach to managing multi-project development environments.

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