…unless the workers on the “front line” are given the autonomy and authority to make key decisions about product quality and the structure of their work. They also need the authority to be able to stop the line should a quality issue occur.
LEAN only works when the workers are enmeshed in the decision making process and their responsibilities rewarded with more secure contracts and conditions.
Some organizations try to introduce LEAN on a piecemeal basis but this will only lead to disappointment. In order to implement a LEAN strategy successfully workers need extensive training in order to exercise their autonomy effectively. This means a real commitment from Management to Training and personal development.
An effective LEAN strategy depends on a complimentary commitment from workers and management.
Jaguar XF - a great example of new product development success
This weekend jaguar Land Rover announced that it had reversed its threat to close one of its U.K plants and, even better, said that it would create thousands of new jobs including 1500 at it’s plant at Halewood on Merseyside.
Barely 2 years after fears that Jaguar Land Rover might fold Q2 profits of £233 million have boosted confidence in the future of the luxury car market.
A large part of this success is due to innovative new product development and in particular the success of the new XF range.
According to data from the European Automobile Manufacturers’ Association (ACEA), the number of Jaguar’s being registered in Western Europe in April rose 70.3 per cent year-on-year – way above any other volume manufacturer.
Jaguar have addressed one of the main concerns amongst luxury car consumers – the trade off between performance and fuel consumption. The XF does a staggering 0 – 60 m.p.h in 5.3 seconds and still manages a meagre 47 m.p.g.
Jaguar have demonstrated how investment in innovation and new product development can bring success even in the most difficult of economic climates.
Now that Ed Miliband has being elected Leader of the Labour Party perhaps we should expect some real policies to revive the U.K manufacturing industry. Ed has mentioned “broadening the industrial base” but there is precious little on the official Labour Party website to illustrate what this means.
The last Labour Government presided over the biggest decline in manufacturing industry EVER ! from 28% GDP in 1996 to a pathetic 10% in 2010.
“So what ?” you may ask.
Well, manufacturing is important for the following reasons:-
1) Jobs tend to be higher paid than those in administrative rolls.
2) Every job in manufacturing creates 10 others in the Supply Chain.
3) Products manufactured in the U.K generate important foreign income and reduce the trade deficit.
4) Making things generates a sense of self worth and pride.
5) Manufacturing provides valuable Tax revenue.
If we seriously want to reduce the current account deficit and claw our way out of recession we need some real policies to revive the manufacturing sector based on new product development and innovation.
So Ed – tell us what you will do for manufacturing ?
Now you need to add those ideas generated from your Brainstorming session to your Product Roadmap. We suggest the following process:-
1) The first key step is to match the New Product Ideas to the Technology Roadmap. If the Idea does not match up to the Technology available then the capability to bring it to market will be extremely limited and the cost of developing the appropriate technology will have to be taken into consideration.
2) The Business Case should be thoroughly reviewed in terms of potential Market, Unit Cost, Selling Price, Volume, Resources etc
3) Products generating the greatest IRR (Internal Rate of Return) should be given priority.
4) Only when the above process has been followed and New Product Ideas meet the required Company criteria should the New Product Development commence.
By pursuing a New Product Development process which follows a defined Product Roadmapping process you will ensure that New Product Developments are resourced effectively and time to market is minimized which brings maximum returns.
Have you seen “Undercover Bosses” on Channel 4 ? (9pm Thursdays)
In the series a number of company Executives go “undercover” to see how their business really works.
Last week it was David Clarke’s turn. David is the C.E.O of Hotel chain “Best Western” which doesn’t actually own any hotels but acts as an “umbrella brand” and booking agent.
David explained to his rather bemused board that he was going undercover for 5 days and would report his findings on his return.
David grew a beard and assumed an alternate identity.
He needn’t have bothered really because, despite a 1 million pounds marketing campaign, none of the staff had any clue what Best Western did or who they were.
David met a number of staff most of whom were extremely dedicated despite having to work extra hours unpaid and generally receiving just above minimum wage.
The funniest was the maintenance guy who clearly didn’t give a sh*t !
“Aren’t we going to fix that properly” asked David. “Nahh we’ll just move it to another room” – so that when the Best Western Inspector returned and checked the same room the offending item would be elsewhere and replaced by one from another room. Other shenanigans involved changing the room numbers on the Inspector’s report to confuse him on his return.
David, quite understandably, was not amused.
David returned to the boardroom to announce his findings – The Marketing Director was visibly shocked to hear that the advertising campaign had been particularly ineffective.
At the end of the show David anounced (in Secret Millionaire style) his true identify to the staff he had met during the show.
One Lady had worked for Best Western for 20 years. She earned around 6 pound per hour as a Cleaning Team Leader and regularly worked well over her standard shift for no extra recompense. During the show it transpired that her Son had spent some considerable time in Great Ormond Street Childrens hospital. Consequently David, in best philanthropist style, got out his chequebook. The Cleaner’s lip trembled and a loose tear rolled down her face as he wrote out a cheque for…….two and a half thousand pounds.
Best Western is part of the Interchange & Consort Hotels Group Ltd which is a private limited company and as such its accounts are not readily available in the public sphere in the same way that a PLC’s are. It is however one of the largest hotel chains in the Western world. One would have thought that a more generous donation would have been in order from such a “prestigious” organization rather than this rather tawdry sum.
The program highlighted a number of issues prevalent in many companies today:-
A boardroom in the bunker mentality – completely out of touch with it’s own workforce and the issues it faces on a daily basis.
A CEO living in a “bubble of bullshit” provided by his fellow Directors.
Workers being exploited on minimum wage and working excessive hours.
Workers with such dedication compared to their highly numerated counterparts in the boardroom it makes you seeth.
There is an old Management technique called “Management by walking around” which is exactly what it says on the tin.
Executives need to extract their heads from their own orifices and get out there on the shop floor and find out what the hell’s going on in their own organizations. Get out there and talk but more importantly listen to your own workers.
In the 1980’s Britain was a divided nation in more ways than one.The industrial strife of the miners strike and the subsequent pit closures took a terrible toll on the Economy of the North with high unemployment and social deprivation rife in cities like Newcastle, Liverpool, Manchester & Sheffield. No one captured this division better than the comedian Harry Enfield with his cockney character “Loadsamoney” and his Newcastle counterpart “buggerallmoney”.
Whilst these caricatures caused hilarity both North and South they represented real, deep cultural divisions.
Of course the South has always had it’s own problems of density of population, high housing costs, congested roads, increased pollution and pockets of real deprivation alongside unbridled wealth.
In the 1990’s onward there has been tremendous progress in the North. Cities like Newcastle, Manchester & Leeds are unrecognisable compared to 20 years ago. Rather than squander money City councils like Salford have done a tremendous job in bringing new investment to previously deprived areas and building new, modern infrastructure which is the envy of the world.
The massive cuts announced by the coalition Government risk undoing all of that and there is a real danger that their impact will be felt far more sharply in the North where there is a much greater dependency on Government and Civil Service jobs.
This must not be allowed to happen. There must be Government incentives for New Businesses to set up in the North. In these days of electronic communications there is absolutely NO good reason for New Start ups to be located in the South East. Newcastle, Leeds, Manchester & Liverpool all have excellent airports and rail and road infrastructure. There are skilled and educated workers available at a fraction of the cost of workers in the South East.
This is not a plea for sympathy, it is a demand for equality of opportunity.
If we want to avoid another North South divide, with all that entails, we must encourage Business Investment in the North.
Back in 2006 Reflex Semiconductor was a medium sized electronics business with Sales Revenue around $200 million and a respectable Net Profit of around $5 million.
The company had several hundred customers and a diverse and mixed product range.
Unsatisfied with performace the Board decided to appoint a new President of Marketing.
This guy was called Max Cutter (I kid you not) and he summed up his philosophy in his joining speech.
” Guys, I want to re-focus on our core business. 80% of our profits come from 20% of our customers but 80% of our efforts are in supplying the lowest contributing 20%” (He was obviously familiar with the Pareto rule)
“I want to re-focus our business (hang on Max, how long have you been here) by eliminating the lowest earning 20% and refocussing our efforts on the highest grossing 20% and watch this business GROW!!!”
When the clapping and cheering had subsided Max set about his business. Gathering together a multifunctional team of career oriented individuals from all levels of the organization (well, engineer level up anyway)
Pursuing a mantra of ‘All Change is Good’ they set about trimming the companies customer database, removing anyone who contributed less than 0.5% of Total Sales.
This carried on for several months.
The Quaterly results were due to be published when Max announced he was leaving the Company for a better position. Despite much persuassion and the offer of a 30% increase in salary Max left anyway. He did get a nice leaving present of a Rolex watch presented by the CEO.
The Quaterly results indicated that Sales were down to $140 million (-30%) and Profit was now a loss of $1.2 million.
Naturally, a Consultant was brought in to assess the situation and, after one weeks analysis, She reported that NO ONE CUSTOMER REPRESENTED MORE THAN 0.7% OF SALES.
The companies customer base was so diverse and its product range so varied the Good Old Pareto Rule didn’t apply in this case and Max and the team had successfully exterminated 30% of a perfectly good business.
Unfortunately Reflex Semiconductor never recovered and went bust a year later.
Max went on to get a job in investment banking and invented something called the “Credit Default Swap”….
To increase the success ratio in New Product Development it is essential that your company has its own New Product Development Roadmap.
This Roadmap highlights the Products your organization intends to develop in the coming years. These product developments should be based on sound market intelligence, garnered from current customers and taking into account market developments and competitor analysis.
The New Product Roadmap doesn’t just identify market opportunities. It also takes into account the Technologies, Resources, Finances, Production Capacity etc etc so that the whole Organization knows exactly what needs to be put in place so that that the New Products are launched successfully.
The New Product Roadmap needs to be approved at the very top of the Organization. It is a “living document” which should be reviewed on a regular basis and updated as required.
The adoption of a New Product Roadmap clarifies the direction the organization is headed in and ensures that everyone is “singing from the same Hymn sheet”
“If you don’t know where you’re headed any road will take you there”
Henry Ford once commented that if he’d asked his customers what they wanted they would have replied “Give me a faster horse”.
