Ready, Set, Change – Well Maybe Not

This thing about wanting to make positive changes and then never really engaging is a funny thing about human nature, and about change in general. We know that something is broken; we talk about it at great length and how it’s impacting our ability to produce better. Then, that’s as far as it gets. The action to follow through falls apart, usually with some trumped up reason as to why now is not the right time.

I see this happen in organizations all the time. Things are moving along towards a root cause for a known problem. Great discussion is happening, objectives are being put in place, ideas are flowing and then that’s it. Suddenly, it’s not a good time to proceed. The fear of change is now dominating what was once rational thinking. The path to improvement has been cut off by a realization that this change may have an impact on an individual’s daily routine.

It’s OK for you to change, but don’t mess with my world! The reality is that we all must be open to change. From down in the trenches to the CEO we must realize that we are not perfect and be open to changes in the way we operate. The problem is not only over the wall in marketing, design, test, the business unit or product engineering. The problems we are having in new product development begin right here with each of us. If you can honestly arrive at that realization, change will be natural. Remember - It’s not about you; it’s about us.

Assessing NPD Efficiency

If you were asked to define the efficiency of your New Product Development efforts, how might you respond? It's not an easy question to answer and I am sure the variation of responses would be fairly significant, depending on which organizational disciplines were queried. Typical responses cover a broad range of answers that are primarily discussed in small groups over lunch, in the break room or at happy hour. These low visibility assessments are typically an emotional take of the situation, lack specific metrics and rarely lead to action.

Nevertheless, it is important to be able to present a succinct answer to the efficiency question. Not as a collection of individual answers but an organizational answer, one that is quantifiable and actionable. Without an agreed figure of merit to describe efficiency of NPD efforts it is impractical to expect anything will change. This is not about blame; it is about leading an organization down a managed path of change, culminating in measurable improvements. Accomplishing this requires the establishment of a baseline that describes current execution effectiveness. This figure of merit can then be utilized to identify a new target for efficiency.

This key metric must describe NPD efficiency by providing a fact-based judgment to define an organizations effectiveness at producing new product revenue. Consider that the primary objective for any project is realized revenue that meets a specified timing, figure and margin. Revenue is the only motivation for starting a project, therefor it must figure substantially into the measurement of success. A successful project is not a tapeout, first samples, a completed characterization or production release; it is sales that meet a planned date, margin and value. Any project success metric that is not tied to a revenue target is really of little value and may actually hinder improvements by providing a false passing grade.

Revenue generation as planned means that a proper market need has been defined and a product has been produced that fills that need. That's what will keep the stockholders happy and the paychecks coming. Many times the metrics are far too short sighted and everyone along the NPD path has small sub-organizational successes to report, however the big picture result is missed revenue; and that is unquestionably a failure, pure and simple. Emphasis on a big picture revenue metric makes everyone accountable and empowers each individual to challenge project assumptions. Now the question is this - how has your organization been doing on enabling project revenue and where deficiencies are noted, what is the game plan for mitigating them?

Now is the Time for Emphasis on Organizational Effectiveness

The business climate we are facing today is unquestionably a painful one for the semiconductor industry, as well as most others. Energized by the cost sensitive nature of this climate, a focus on efficiency provides the benefit of organizational growth. The growth I am referring to is best characterized as an improvement in efficiency that results in financial growth through reduced development costs and earlier new product revenue.

Organizations that will grow stronger during this depressed economic period share a common vision that efficiency of operations carries significant importance. They believe now more than ever that there is something to be improved upon, something that could be done different, or a possibility of newly discovered opportunities for organizational success. This accent on change for these groups will yield positive results through specific improvement actions. Growth organizations will be motivated by a passion to seize this current emphasis on cost reduction as a motivation for creating a new level of operational effectiveness. Stronger organizations will evolve from a belief in doing things differently, that sustainable change is achievable, that the status quo is just not acceptable. They will take positive steps to jettison the project execution baggage that has long been accepted and tolerated through the more prosperous periods.

Organizations that bolster efficiency during this period share a vision that has no room for waste in their development processes or their portfolio management. They will have the right product ready to generate revenue when the demand floodgates open. An achievement that will be enabled through focused actions today, during a period when many organizations will fall prey to an emphasis purely on cost reduction. The winners out of this downturn will have emphasized NPD efficiency improvements as a complement to the routine cost reductions.

Prospering organizations during this challenging business period will display many of the attributes in the figure below.

Lean and mean must be the mantra in this battle for survival. This is not a time for accepting less than the best out of people, decisions, strategies, workflows, product portfolios, suppliers and customers. An emphasis on organizational effectiveness in the current cost conscious climate will ensure organizations are well prepared for long term financial success. Unbeatable organizations will be highly efficient in their execution and brilliant in creating products that exceed market expectations.