1 Copyright © 2013 by ASME Proceedings of the ASME 2013 International Design Engineering Technical Conferences & Computers and Information in Engineering Conference IDETC/CIE 2013 August 4-7, 2013, Portland, Oregon, USA DETC2013-13232 PRIORITIZING THE MANY MEASURES OF SUCCESS IN OUTSOURCED DESIGN William J. Palm IV Department of Engineering Roger Williams University Bristol, RI, 02809 wpalm@rwu.edu Daniel E. Whitney Engineering Systems Division Massachusetts Institute of Technology Cambridge, MA, 02139 dwhitney@mit.edu ABSTRACT Companies that develop new products increasingly outsource design, a trend that has prompted much concern but little prescription on how best to manage such projects. One challenge is the lack of understanding of what constitutes success in outsourced design. To provide clarity, this paper identifies academic and practical perspectives on success from the literature as well as our own interviews with design consultants and consulting clients, organizes the perspectives into a typology featuring seven distinct dimensions of success, and then prioritizes the key success measures using a survey of 194 additional practitioners. The results suggest that past research has generally focused on the wrong success measures, overstating the impact of problems during development and the relative importance of return on investment, and omitting key measures such as working relationship quality, project value, and client satisfaction. Not all success measures are well correlated; a project may do very well on some but poorly on others. While each measure has it merits, client satisfaction appears to be a promising summary measure. INTRODUCTION Companies that develop, brand, and sell products increasingly outsource product design [1, 2], a trend that has prompted concern from scholars and practitioners alike. Business strategy scholars caution that outsourcing design may jeopardize the firm’s intellectual property, erode its internal capabilities, and even develop its current suppliers into future competitors [1, 3, 4]. The trade literature suggests that outsourced design projects are frequently late, over budget, or fail to meet requirements [5, 6]. Surveys of product development professionals find that many are suspicious of outsourcing design [2, 7], with nearly a third of those at large firms believing that design outsourcing is a net liability to their company [8]. And yet the use of outsourced product development continues to grow [9, 10], presenting an apparent paradox: Why are firms increasingly outsourcing design if both strategic theory and operational experience caution against doing so? One possible explanation is that the literature has painted an unrealistically gloomy picture by focusing on the wrong metrics. Much of the trade literature lacks precision in how success is defined and measured. Some studies do not specify their outcome measures, but rather use vague terms such as “success” [11], “struggled” and “disaster” [6]. Others conflate the causes of poor outcomes (e.g., “3 rd party lacked management ability”) with their effects (e.g., “project failed to meet requirements”) [5]. The handful of academic studies on outsourced product development outcomes have been more precise, conceptualizing success as return on investment [12], or design quality [13], but it is unclear that these are the best approaches to use [14]. Whereas scholars of traditional (i.e., non- outsourced) product development have extensively examined the meaning of success in that domain [15], very little research has been done on the meaning of outsourcing success. As part of a larger effort to document and explain outsourced product development outcomes, this paper examines the many meanings of success in this domain. Specific objectives are to: 1) identify meanings and measures commonly used by scholars and practitioners, 2) organize the identified measures into a typology of key success dimensions, 3) describe how client and consultant practitioners prioritize these dimensions, and 4) evaluate the suitability of the identified measures for use in descriptive and explanatory analysis. We begin by reviewing the success measures used in three streams of relevant literature. We then compare them to the results of our own in-depth interviews with 36 design consultants and consulting clients [14]. Finally, we describe the results of a