# Approaches to Product Development > [!cite] > *Since many companies design new products one at a time, the focus on individual customers and products often results in a failure to embrace commonality, compatibility, standardization, or modularization among different products or product lines.* > > _Meyer and Lenherd (1997)_ In many companies, Research and Development (R&D) generates new technology, which leads to a steady stream of new products. Likely, there is no commonality, and if there is, it is probably a coincidence and not intentional. The end result, in the worst case, is a lot of different products and components with **proliferating variety**. This immense variety has an overall negative impact on the company, leading to **unwanted costs** and eroding profit margins. ## Two Paths In contrast to a traditional product development approach, **product family design** seeks to cut down on costs, development time, and limitless proliferation of variety through two main types of approaches. ### Top-Down Approach In a top-down approach, a company strategically identifies, manages, and develops a family of products based on a product platform and its module- and/or scale-based derivatives. In this case, the firm is **intentionally sharing** components and processes across new products. In a top-down approach, R&D works on core platform technology. In this case, the platform comes first , and the products are derived from that common technology. This approach lends itself to economies of scale, as well as more organic growth of the product family. ![[Pasted image 20241209102117.png]] ### Bottom-Up Approach In this scenario, a company redesigns and/or consolidates a group of distinct products by standardizing components to improve economies of scale and reduce inventory. The driving forces behind this approach tend to be new regulations, organizational changes, or a desire to achieve cost savings. As companies go global and acquire other firms, they suddenly have various product lines that are competing in the same space. They may decide to **standardize** or **consolidate** the product line and eliminate obsolete or redundant products. With a bottom-up approach, an existing product line is standardized into a **platform**. Then, additional products are derived from the newly consolidated platform. ![[Pasted image 20241209102147.png]] # Affordable Customization: Reactive vs. Proactive It all comes down to whether firms are making changes **reactively** or **proactively**. In the case of the bottom-up approach, a firm is reacting to external changes in the market, such as new regulations or simply a desire to save money. In the case of a top-down approach, a firm is engaging in proactive modes of platforming, which is far more cost-effective. Examine how the costs are distributed for each approach. ![[Pasted image 20241209102402.png]] # Conclusion It is best to strive for platforms—both products and processes—that allow you to be **proactive**. This allows the firm to spend the majority of their customization efforts on developing standard parts and modules that serve the whole product family.