COMPASS MAGAZINE #10
COMPASS MAGAZINE #10

HIGH TECH MARKET DOMINANCE : Success at New Product Introduction also builds consumer loyalty

From early concept to distribution, high-tech companies choreograph dizzying volumes of information and actions to deliver new products to consumers on ever-shrinking schedules. To manage the New Product Introduction (NPI) challenge, high-tech manufacturers are adopting new tools and processes and developing new ideas about the very nature of their organizations.

Consumers rarely think about the complex New Product Introduction (NPI) process that brings amazing electronic products to retailers’ shelves every few months, but the high-tech companies that produce those devices fight relentlessly for every possible advantage in the field.

As devices become more complex – combining advanced electronics, software, and mechanical design – and development cycles become shorter, the potential for errors that can delay an introduction or kill a product in the marketplace become greater.

Michael Zapata, a technology industry entrepreneur and executive board chairman of Protochips, which develops analytical tools for nano-scale materials research and development, highlights three elements that high-tech companies must master to succeed at NPI:

1. Tools, processes and methodologies, which represent “the table stakes” to even play in the game.
2. A corporate culture of innovation exhibited at all levels of management.
3. The right people in key positions who know how to champion and promote NPI.

A company can get the first two right and still trip with the wrong person in a key leadership post. “If he’s talking about processes and bureaucracy, he’s just a manager,” Zapata said. By contrast, a leader will talk about the market, the risks, and about translating ideas into action.

Michael Keer, founder and CEO of California (USA)-based Product Realization Group (PRG), which provides NPI consulting to high-tech companies, agrees. “The tools available out there are vast,” Keer said. “Unfortunately, the people available with the skills to leverage them are limited. So much depends on a company’s management team and culture. Those companies that invest in operational efficiency early in the business cycle tend to be more successful. Those that focus on marketing or technology without investing in a strong NPI process tend to be weaker.”

Typical warning signs of NPI weakness include a lack of management understanding or support; insufficient capital and resources, including expertise; unrealistic schedules; designs that are not scalable; faulty or incomplete testing; incorrect tooling for manufacturing; and poor communications, according to a 2012 white paper Keer authored titled “New Product Introduction (NPI): Seven Best Practices.”

GAINING PERSPECTIVE

Sanjay Keswani, CEO of Consensia, a Silicon Valley software firm that helps high-tech companies manage their NPI processes, counsels executives who face any of these challenges to step back and take a holistic view of their organization. With so many disparate and simultaneous activities required to bring a new product to market, it is easy to lose sight of the big picture.

“You need a really good cross-functional team with a strong leader,” Keswani said. That leader, overseeing a strong team responsible for a vast array of disciplines and expertise, needs to be able to stay focused on a very basic question: “How do I take all those relevant ideas and get something that addresses the need of the market?” To ensure success, Keswani urges NPI leaders to:

• Create what the industry refers to as clear “phase-gate” release processes that allow managers and teams to assess progress along the way. At each gate, key questions can be examined. For example, were previous steps properly executed? Does the business rationale still hold? Are resources still available? At each gate decision makers can decide to go, kill, hold or recycle a project.

• Limit risk every step of the way. “That comes with experience,” Keswani said. “Consider the challenge of changing specifications after they have been approved. It’s OK to change, but you’ve got to manage the risk.” For inspiration, Keswani suggests high-tech leaders look at more mature industries like automotive and aerospace & defense, which have a process orientation to analyze and manage change effectively. “High-tech needs to draw upon more from these industries and put in systems engineering disciplines to manage product complexity,” he said.

• Adopt rapid prototyping and accelerated testing using 3D computer-aided design (CAD) models to analyze fit, form and functional performance in the virtual stage, before moving to physical testing. “Simulation software has become a vital quality assurance tool in not just testing product design, such as drop testing, but also in ensuring that part suppliers are current on changes, and that the decisions they make mesh with the decisions of related parts and systems,” Keswani said.

Early planning is critical, experts agree. Planning includes coordinating downstream activities that are interdependent but must occur simultaneously, including engineering and operations, product development and testing, market analysis and regulatory compliance, manufacturing processes, logistics and supply chain requirements, packaging and distribution, marketing, sales and support training.

EMPOWERING WITH INFORMATION

PRG’s Keer points to a tremendous explosion of resources, including sophisticated Product Lifecycle Management (PLM) systems, that make it easier for cross-functional teams to handle simultaneous activities by giving everyone real-time views of a product’s progress. “In the last five years there has been real improvement in the storage, control and communication of the product record, which now enables companies to overcome the historic fragmentation of information and achieve a strong NPI process,” Keer said.

By helping to coordinate NPI activities that increasingly must run in parallel tracks, such systems also help companies hit ever-decreasing time-to-market deadlines, said Geoffrey Annesley, CTO of California (USA)-based Serus a supply chain management company.

For example, a great product design typically involves a team of design engineers and a raft of Intellectual Property (IP) management issues that, in the end, must be scaled to manufacture a high-quality product in massive quantities. Manufacturing, typically outsourced, requires its own specific design of the manufacturing process, with its own team of designers and its own IP. “Those two disparate processes need to run in parallel, and they need to feed back to both groups of designers,” Annesley said. “That often is a big mess. Outsourced manufacturing aggravates this.”

Kevin Leedy, director of QCA Supply Chain and Logistics at California (USA)- based fabless semiconductor giant Qualcomm, knows the challenge well. In the wake of its 2011, US$3.2 billion acquisition of Wi-Fi networking technology company Atheros Communications, Qualcomm experienced 30% year-on-year growth of its supply chain transactional activity. But all of its manufacturing was outsourced and 80% of its operational data was generated outside Qualcomm.

“Those companies focused on operational efficiency tend to be more successful. Those focused on marketing or technology tend to be weaker.”

Michael Keer CEO, Product Realization Group

“I didn’t have full visibility,” Leedy said in a video webinar on the company’s website. “Clearly there was a disconnect. I was employing multiple full-time employees to respond to those day-to-day changes to resolve issues. It just was not the solution we needed to be fully scalable. It was impacting our growth.”

To automate its processes, Qualcomm implemented a cloud-based, virtual supply chain management tool that could be easily adapted to each supplier. The tool provides real-time, accurate data on material supplies, resource consumption, pay points and invoicing that supported the company’s revenue and transactional growth and freed up its human talent to manage process changes linked to the merger.

PANASONIC: AN NPI MASTER

Regardless of how you characterize the challenge, however, the driving force behind every aspect of NPI is the interrelated need for speed to be the competition, plus great products that will delight consumers and keep them coming back to buy again and again. Consumer electronics manufacturer Panasonic is a master of both.

“I feel that speed is the biggest issue,” said Shigeo Okuda, head of business development and promotion for Panasonic’s 4K tablet, introduced at the 2013 Consumer Electronics Show (CES). “We of course need to reduce process times in our manufacturing operations, but our greatest challenge is how quickly we can read the changes in the market, reflect them in our development operations, and launch the right products in a timely fashion.”

Staying ahead of the competition is a challenge, because information becomes available so quickly, Okuda said. “Network developments mean that information is now transmitted instantaneously, the market changes rapidly and the digital era has progressed to the point that products of similar performance and fixed quality can be manufactured quite successfully. This has made it difficult to launch, and continue to launch, products that will be truly successful.”

As it develops new products, Panasonic therefore keeps its focus firmly on the customer’s wants and needs. “People form the central focus for everything we do,” Okuda said. “We look into their lifestyles and work hard to improve them. This represents the starting point as we aim to realize better lives for all our customers.”

Panasonic helps to ensure that its products meet customer needs through extensive testing in the digital stage, when changes are easy and affordable to make. “To achieve a greater degree of certainty as far as this success is concerned, we need to set and test hypotheses as to how our customers might use our new products in what kinds of scenarios, and how these products will bring value to the customers as they do so,” Okuda said. “If a customer response then suggests that our hypotheses have been slightly off the mark, we need to work quickly in making adjustments and modifications. If we can do so then we ought to be able to launch new, refined products that will be to our customers’ satisfaction.”

To achieve this goal, Panasonic has employed advanced PLM applications and processes. “Already, we have been able to significantly reduce both time and costs involved in refining our designs, thanks to the advances in digital simulation technology, which is replacing the succession of (physical) prototype models that we had to manufacture in the past,” Okuda said.

BUILDING A CULTURE OF SUCCESS

Companies that are organized to share ideas in a collaborative dialogue with suppliers, colleagues, and even customers, as Panasonic does, stimulate an open exchange of knowledge that tends to make them successful in their NPI processes, said Robert Handfield, a professor of supply chain management at North Carolina State University in Raleigh, North Carolina (USA) and consulting editor for the Journal of Operations Management. “Very few companies are good at this,” he said. “It takes time to develop relationships and trust.”

Handfield points to Honda as an example of a successful collaborator. The car maker generally gives its suppliers a target cost and a performance specification, not a design, and asks the supplier’s engineers and designers to find the best solution. “That sets off a dialogue,” Hanfield said. “Using that approach, the supplier can come to them with ideas. To get to that point, you have to build trust.”

Noel Sobelman, a partner at Kalypso, which helps life sciences and high-tech companies develop new products, said he has seen many of the NPI pitfalls to avoid in his 22 years of industry experience.

“One big problem occurs when companies treat process improve­ments as if they were the flavor of the month,” he said. “Successful continuous improvement programs require a culture where you continuously look to employees for improvement ideas.”

NPI processes demand their own metrics and depend on change agents in leadership positions with organiza­tional clout. “It’s very important to have people who are not just process policemen who throw a penalty flag when somebody does something wrong,” Sobelman said. “People who understand the link between capability improvement and sustainable business success are hard to find, as well as senior leadership that values their contribution and drive to get things done. Process improve­ment is not sexy, but doing it well separates the successful from the laggards.”

NPI AT A GLANCE:

To succeed at NPI, the experts interviewed for this article recommend that companies cultivate:

• A culture of innovation
• A continuous flow of market and customer insights, forged through collaboration with partners, customers and teammates
• Leaders who can clearly communicate how to translate ideas into action with operational efficiency
• Tools and methodologies to accelerate and streamline work
• Early planning to coordinate interdependent, simultaneous downstream activities
• Automated workflows to provide clear status visibility
• Rapid prototyping and accelerated testing with 3D models and simulation
• Clear processes to balance risk with potential rewards
• Sufficient capital and resources to support realistic release schedules and adequate testing
• Phase-gate release processes to facilitate clear go/no-go decisions
• Metrics-driven continuous improvement processes

by Dan Headrick Back to top