Wednesday, December 30, 2009

Six Issues that will Inhibit Profitable Growth in 2010 - Be Ready

Welcome to 2010! The last year was one of survival, where many businesses failed or were on the brink of failure. All attention was focused on making ends meet, where cost reduction was the primary objective. The news of a 2010 recovery for the semiconductor industry has been increasingly positive and the focus will be turning from survival to "profitable" growth. What's on your agenda for contributing to the efficiencies necessary for this goal? To stir your thoughts for 2010 objectives this blog post will share my observations of the high-level execution barriers semiconductor new product development teams are facing.

Over the years I have learned a great deal about the challenges that many organizations face in new product development. Interestingly, there are far more similarities than there are differences within the numerous companies I am in routine contact with. Below you will find a synopsis of the six most common execution barriers I see in product development organizations as of the end of 2009. As you read, honestly look for similarities to your organization and decide what you will be doing about them in 2010, the year of "profitable" growth. Some organizations are aware of these systemic issues and are taking action, some are just painfully aware with limited action towards a solution and others are blissfully unaware; where is yours?

Focusing on Cost more than Revenue Generation
Every decision about making improvements to project execution comes down to incremental cost, seldom about increased revenue potential. Issues that are constantly disrupting projects are rarely put in terms of prospective income that is left on the table; a figure that I assure you will command attention. Building a pure incremental cost case to make a decision leaves out one of the greatest motivators there is, the cost of doing nothing. Consider not the cost of fixing something, but the cost of not fixing something. A revenue based case (investment) will always provide the best decision and measurement base for any proposed change. If an improvement can't be aligned to revenue generation, then it truly has no value.

Who Owns the NPD Process?
Organizations of today are extremely compartmentalized by functional area, creating artificial boundaries of responsibility and ownership. Problems with product development execution are often solved in a localized manner, limiting true cross functional solutions for the full New Product Development (NPD) cycle from concept to revenue. The net result is that improvements may have limited positive impact on revenue, even though they appear as significant improvements from a lower level view. Where does ownership of the entire NPD process reside? If your answer is project managers, that may not be a valid assumption. I have seen many cases where project managers have boundaries of reach into functional areas and across the full development process. Is the owner of your total development process implied or explicitly identified? Make sure the keeper of your NPD process is crisp about ownership, responsibility, objectives and empowerment. This individual must remain vigilant at identifying roadblocks and providing solutions for the overall process, from concept to revenue. "Not my problem" is a phrase the properly armed process owner will never be heard saying!

Limited Organizational Learning
Organizational learning is defined as the open minded ability to explore and adapt to new and fresh approaches to project execution. Learning also includes the capacity to improve the current project work flows by uncovering barriers, discovering root cause and developing solutions to remove execution roadblocks as a continuing source of disruption. Many organizations simply do not have the time, motivation or expertise to develop into a learning organization. A learning deficiency firmly promotes the status quo, further expanding the incestuous pool of same thinkers that stymie organizational growth. Learn to learn and prosper, or fail to learn and "try" to catch up later. Proactive or reactive; it really is a choice.

Overdependence on Tools and Methods as the Solution
There is a preponderance of emphasis on tools and methodologies to fix everything that ails NPD execution. Although tools and methodologies are a significant enabler of success, they become a band-aid for underlying people interaction issues. Tools are no substitute for promoting member participation in solving the issues that personally impact them, an area often glossed over and ignored as tool solutions take center stage. Learn to learn from those that are in the trenches working on new products, listen to what they have to say. Most execution issues are people issues - lack of clarity, lack of expectations, lack of communication and a lack of involvement. It's a people thing!

Acceptance of Schedule Failures
Schedule Failure defined: Not meeting revenue projections (timeline or amount). I am very firm on this definition and no other description is valid. Anything less and your organization will lose the proper focus! The pressure to meet schedules is intense, yet most projects slip and the common belief is that the project must not have been properly planned, or the team did not live up to their "commitment". That's typically the end of the story. The truth is that the reasons for a schedule failure are rarely analyzed, although there would be a wealth of information to be gained in doing so. Reality - schedule failures are both expected and accepted, though no one would dare speak that truth in public. Tolerance will always breed inaction; either a schedule is gold or it is coal - what's it to be?

Living in the Problem, not the Solution
Many organizations will talk about known problems for months or years, never taking the next step towards a solution. This extended period of time wallowing in the problem usually comes down to a lack of ownership, an unrealistic focus on cost, or a belief that the origin of the problem is elsewhere, further strengthening inaction. To put it in simple terms - If the problem is affecting you, it's your problem and what are you going to do about getting it solved? Why isn't now the perfect time to move from an incessant discussion about the problem to getting it solved? Fear of change allows the problem to prosper. Understand the sources of the fear, face them head on and put them behind you. Step up to the plate and hit the problem out of the ballpark!

There you have it, my observations of the most common afflictions I see in product development organizations. 2009 saw many businesses either failing or on the brink of failure, small local businesses as well as large corporations. What brought them there? If you believe it was the downturn, you are likely one who lives in the problem. If you believe they contributed to their own demise, then you may be one who strives for solutions. In 2010 "profitable" growth will definitely mean things will need to be different than 2009. What are your plans?

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