innovative product, company loses money, and cost reduc- tion programs begin right after its .... and Innovation consulting company, has worked at small to large ...
BUSINESS PLUS EXPERT
Making Product Innovations by Praveen Gupta
Linking customer requirements to internal criteria to ensure a smooth new product introduction and its profitability Too many times I have seen that new products are launched and management expects to lose money in its early years. Internal defect rate is high so is the rework. New product takes away production capacity from existing profitable products. Customer returns are excessive, and there is a long list of unhappy customers. It all results in higher cost of goods sold for the organizations and turns excitement of new product into nightmares. Instead of earning premium on innovative product, company loses money, and cost reduction programs begin right after its launch. How can we make new product innovations profitable right off the gate? A new product innovation begins with what drives development of new products. Generally speaking, new products are launched either by the decision of a marketing director or vice president based on his or her scanty understanding of the market, to justify ones existence, or due to a long term corporate strategy to launch certain new products at certain frequency. In either case the leadership dictates the product launching date before its development begins. Or even before requirements for the new product have been gathered, or a thorough market research has been completed. Having worked in several corporations across industries I have seen successfully launched products, failed right after launch products, and canned before the product launch. I, personally, closed a new product the day of its launch after its unacceptable performance in the marketplace. I have learned that it takes everything to be right for bringing a new product to market successfully. When a new product launch fails, the following represents key factors that can go wrong: 1. Questionable customer requirements 2. Ill-defined product development process 3. Insufficient new product evaluation during development 4. Pinching penny during the product development 5. Poor transfer of new product from development to production 6. Inefficient internal corrective action process resulting in recurring problems In the past, customer requirements have been jotted down on a piece of paper, a napkin picked up, in a restaurant, or a quick email, or even communicated verbally. Developing a new product based on limited understanding of customer requirements give a flexibility to design ‘something’ that simply
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Not only starting the new product development with sketchy requirements is a major issue in successful product launch, the product development process is also equally superfluous. It focuses more on bureaucratic practices rather than the quality of the design and its reproducibility. Most new product development processes include development, reviews, testing, launch, etc. however, the weak links are critical reviews at each phase. The new product development process shall not be a formality instead it is a necessity to ensure a profitable new product. One of the most bothering aspects of product development I have experienced is insufficient evaluation of the new product. When a prototype is developed it is reviewed for functionality, I mean the acceptable functionality. When product pilot pieces are produced they are evaluated for their acceptable performance. This is a great opportunity a new product development team misses out to ensure product success. Instead of functions. Thus, designing a functional product becomes target for the design team. The design process begins with forming a team, developing multiple subsystems, integrating various pieces, testing for functionality, tweaking to make it work, and launching the new product. Bingo! It is said at the launch! To change such new product fiasco the designing team must clearly understand which product will offer its customer an enjoyable experience. Customer expectations have been changing from just meeting requirements, exceeding requirements, to really making customer happy. As I was told by one a corporate executive that learning customer requirements is the hardest thing to do because customers do not tell it all. Recent progress in gathering customer requirements has led to three classes of customer requirements that one must understand in order to start product development ensuring enjoyable customer experience. The three classes of customer requirements are: assumed (unspoken) functional requirements, market driven clearly communicated comparative requirements or features, and finally the differentiating unspoken enjoyable surprises in the product. To get an idea, getting four tires in a car, the sunroof, and better designed comfortable driver’s seat can be examples of the three customer requirements, respectively. The unspoken surprise requirements is the result of carefully listening to customer’s unsaid expectations, and creatively designing and delivering unique useful features. In Internet age the distance between customer and supplier has reduced, and thus customers want to experience personal delight almost on demand. Thus new product innovations must specify requirements to deliver customer delights.
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BUSINESS PLUS EXPERT
testing for acceptable (pass or fail) or unacceptable performance the new product must be characterized for internal process conditions and its intended field performance. At this stage product and process optimization will improve quality, reliability and financial viability of the product dramatically. One must recognize that a batch of production pieces at a given time only represents a set of process conditions rather than normal variation in the process conditions. It is critical that pilot units are an outcome of a designed experiment for various process conditions of its critical or sensitive parameters. By optimizing the production process for sensitive product performance parameters, its reproducibility is bound to be much better and yields will be much greater thus reducing the cost per unit. Limited testing has been attributed to arbitrary product launch dates, and lack of time and material resources. In the Design for Manufacturability class we demonstrate that saving small amount of money in the development phase may actually cost 10 – 100 times more in subsequent production and field failures. Therefore, it is wise spend the necessary money in design as needed. Even a million dollars extra spent in optimizing the product design for reproducibility could be distributed over the overall expected product volume, that could result into one or two dollars per unit but that is a big saving over potentially 30% increase in product cost due to rework, repairs and customer returns caused by sloppy designs.
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Sometimes even good designs can result in poor execution in manufacturing due to poor process designs specifying the acceptable lower and upper specification limits rather than defining the production targets. Process designs must always be target driven rather than limits. Building to target leads to the targeted best quality, i.e., virtually zero defects, and thus reduced product testing and verification cost. Building to limits leads to acceptable performance and excessive testing and verification cost. More over, production processes designed to acceptable limits lead to blaming operators for shoddy quality while mindset of building to target always points to product design. It is not a question of who failed the part but why a part failed whose solution lies in engineering not in the hands of the operator or production worker. Manufacturing processes should be designed such that require qualified competent operators but are insensitive to operator variations and makes mistake my people rare. Finally sloppy designed products rarely get better reflecting the culture of the company. These companies also have sloppy corrective action processes where symptoms are addressed and there is never enough time to fix root cause of problems. In any newly designed product there will be initial challenges towards perfection, however, a process that examines its sources rather than symptoms is necessary. I have seen that many times people are busy completing the corrective action forms rather than fixing the process that created the problem.
Normal waste in manufacturing operations is caused by poor product or process designs that do not define targets. A poor design is an approximate design, and a good design is a target driven. Defining targets leads to reduced inspection and testing. This should reduce the cost of appraisal. Another element of cost of poor quality, the cost of failures, is caused by poor process set ups. A good process set up must address the required information, material, machines, tools, methods or procedures, skills and people to help perform the process. Absence of any of these items may result in product failures and failed product launches or unprofitable innovative products. It is a very frustrating experience where everyone works so hard but fails together. It is desirable to succeed together. Failing together is an expensive and mostly unaffordable option.
Corporate losses are caused by process and product failures. Product failures are caused by poorly defined customer requirements, design targets and its transfer to product and process targets. If we strive for perfection in innovative designs new products will be profitable. Otherwise, if we produce sloppy innovative designs it feels better without them because they keep us busy but really do not create value or make anyone happy. In order to make new production innovations profitable one must focus on enjoyable customer experience, design to target performance, and produce to design targets. Profitable growth is guaranteed. Otherwise, life is a struggle only bravo wins it! I would like to thank Saravanan Thangaraja of Frontier International for inviting me to Malaysia for offering my Improving Balanced Scorecard Performance seminar. In line with 2010 being the Year of Creativity and Innovation in Malaysia, we are working with Frontier Innovation Academy and Illinois Institute of Technology (USA) to run a series of innovation courses to train and develop the managers in Malaysia.
Praveen Gupta, the President of Accelper Consulting, an Excellence and Innovation consulting company, has worked at small to large corporations worldwide. Praveen was a pioneer of deploying Six Sigma at Motorola in 1986, and is the chief architect of Breakthrough Innovation (Brinnovation™) framework for helping organizations achieve sustained profitable revenue growth. Accelper has partnered with Frontier Innovation Academy, a subsidiary of FIK International based in Kuala Lumpur, to offer training and certification in business innovation in Malaysia and neighboring countries. The Brinnovation™ framework can accelerate and maximize innovation for developing profitable solutions and creating new growth opportunities.
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