“Change is our biggest challenge”. “Why is it your biggest challenge?” Andre takes a deep breath and says “Good question, Huub, there are many biggest challenges”.
Andre is a man with 20 years of experience in a big discrete manufacturing company. He started his career as a mechanical engineer and today is the R&D manager focusing on cooling techniques. He is the leader of quite a big group of researchers and developers, not only developing new IP but also engineering new features for the new product ranges.
This is a story from the shop floor of product innovation and I believe it is a quite common story, that today is even more painful because of the trend to make products smarter and smarter, with a growing part of software components, embedded or connected. Product specifications get more and more complex.
Andre: “There are lots of reasons why it is a challenge. First let's take the product definition: if I get the product definition from Product Management, well formulated, nicely presented, I know it is going to change. Other departments will start changing it because of technical reasons, or simply because they have a different idea, industrial design makes changes even after prototyping. So I hesitate to start working on it. As a result I will be late and because I also prepare the production process, my team will get deadline pressure. I do my best to change this behavior since a long time, but I can’t get it done”.
“Why not? Which are the deeper reasons in your view?” He answers: “I believe the main reason is that departments have their own agenda. They are islands. Many work for different product lines and in practice they prioritize them to their own criteria, not per se to shared company criteria. Our Board should be harder on shared KPIs. But in our culture engineering departments have a strong position. Also software departments show this attitude. They are used to change. Software is easy to change, compared to mechanical hardware. They give you new versions of the software without proper system testing. They can’t wait till the system is available for testing, so they deliver and move on to another project, for another product line. On top of that, production also has its own agenda. For us it is not predictable when we can test the new product on the production line. So I cannot commit in any way or form to a launch date, In fact nobody can”. “Wait a minute, are you saying that you cannot commit to the date when revenue from the new products should start?” “No I cannot indeed. As long as we don’t have one shared calendar, one roadmap, one and the same KPI, I cannot indeed.”
Well after this conversation I asked myself how the company of Andre still can be successful. Later I found out that 70 % of the new launches are in fact loss making, but that the other 30% made up for the success. The company in fact shoots with hail, many fail but enough hit the target. This means for me that with better coordination the 30% must be improvable to say 50%. That will make a huge difference.
I go for that, and I know we have means to get there. See also this blog post about governance.