Perennial Productivity Problem : Increase Effectiveness from Effeciency

Productivity, a misnomer : The motivation for productivity improvement is different for different companies. The term is broadly defined as “to produce same output (whatever is desired)” with increasingly lesser & lesser input (resources). It is the definition of so called “output” & “input” that creates different motivations for different people. For some, lesser development cost is productivity improvement whereas for others, it is lesser development time. Companies are investing in millions of dollars in various systems & tools, in order to gain an order higher productivity, but often overall benefits remain only incremental.

Align Productivity with Business goals: Assuming the goal of productivity improvement is to generate maximum possible value to customers & share holders, it is important to align productivity with overall business goals of organization. There is lot of cue to take from old manufacturing technologies who have benefited immensely.

Operational managers in these industries continuously monitor & identify potential bottlenecks - Places where system is subjected to greater demand than it can handle & alleviate them by balancing people & equipments. There is only marginal benefit in improving individual throughputs, without considering how their actions are going to affect the performances of upstream & downstream stages.

Organizations focus on improving productivity at every level, from department level to project, team & ultimately at individual level. It is natural to think that the more productive the employee is, is any day better than less productive ones. However, larger organizational business goals are over sighted by this. Individual productivity improvements shall only increase local efficiency, without increasing business effectiveness. Reducing development cost need not be universal mantra, nor reducing development times. What is important is to know if these individual improvements ultimately help in winning in market place profitably.

Base productivity decisions on business effectiveness.

1. Increased Revenue:   What is the impact of  faster development time on revenue? Does it increase useful sales life of the product? It might be surprise in the market & creates a time lag for competition to catch up. The benefits are much larger if there is a switching cost for a customer. For example, it is much difficult to gain a telephone customer from competition than retaining one. Companies can be first in the market & thereby retain customer loyalty due to switching costs. It helps create network externality effect, which companies like Microsoft has so effectively used. White space products shall of 100% market share for some times, with peak sales & profitability. Trade-off cost & time productivity decisions based on hard economic numbers & sound business logic.
2. Increased Profit: Similarly, what is the impact of development cost reduction? It reduces the fixed cost component from total costs, thereby reducing the risk of investment. As lesser fixed cost is amortized over lifecycle, total cost would be less (for same variable cost) & makes product more competitive. However, which lever to operate (cost lever or revenue lever) depends on market competitive conditions.
3. Adapt & Sustain the competitive advantage: Ability to move quickly provides greater flexibility. Most technologies mature over time by being used in field. Early companies shall have data from field conditions & user preferences. It helps in coming with superior solutions than competition & also provide flexibility to changing market needs.

In summery, business goals drive productivity strategies. Traditional bottom up productivity improvement efforts (i.e. from individual contributor to teams to projects to businesses) fail to satisfy the needs of businesses. Improve productivity effectiveness by basing & driving strategies from business to further down.

Software Based Electronic Devices – Trend towards usability & commoditization

Electronic devices conjure up the images of boxes with displays, keyboards & connectors. The spectrum of such devices are large, like industrial automation systems (field measurement devices, controllers, display consoles, hand held devices, computers etc) consumer electronics devices (laptops, PCs, televisions, gaming consoles, mobile handsets, security devices etc). Traditionally, they stay at the center of value chain between high technology semiconductor chips & device/application software.

Semiconductor Industry: Semiconductor chips power electronic devices. Almost every device has some processors & other signal handling chips. Automobiles have upwards of fifty processors, controlling everything from engines to glass wipers. Consumer devices like cellular phones, TVs, DVD players, security systems & all industrial instrumentation systems rely on semiconductor chips.

                Industry has moved a long way from first transistors from Bell Labs in 1947. Combining these transistors in millions on a single chip constitute a semiconductor device like processors, memory or bus drivers. Initial chips lacked performance & reliability. Early music systems had poor sound quality & bulky, Industrial measurement equipments drifted from its set points that required frequent recalibration, most of control instrumentation were manual, security devices were at best alert systems (with lot of redundancy) to manned systems. Initial electronics circuit designs involved deep understanding of semiconductor devices as well as system performances. Larger number of components was required to realize most function, with additional components for various compensations like drift, temperature, offset etc.

                Industry has seen considerable sustained innovation since last 50 years. Industry consists of basically three types namely, integrated devices manufacturers (both design & manufacture), Fabless design houses & Foundries, which do contract manufacturing (Like Taiwan Semiconductor Manufacturing Company). Fabless design houses are flooding market with various custom chips with cost per function at significantly lower than earlier generation. The entry barriers for most of low/medium speed chips are further reduced. As Intel has moved towards more of high end, high speed, R&D intensive, upscale processors, and other manufacturers are concentrating on operation (efficiency) driven custom & usability aspects. For most of applications in industrial instrumentation, security & consumer products, the demand for chip performance is significantly reduced. Niche applications like multimedia, 3D gaming, voice processing etc that demand huge processing power constitute a small market. Net effect of all this is that most of semi-conductor chips are getting commoditized with only differentiation in usability & operations (price).

Software Industry: If we simplify the software industry to mostly contents & applications, the technology play is significantly reduced. Leaving apart some special algorithms & data processing, most of performance & reliability issues are satisfied. However, major driver for the industry is the ability to satisfy the underlying user need & enhance the user experience. Next generation could be the ability of the product to customize to user’s personal preferences & needs. There is more & more demand for companies to come up with applications that could satisfy various problems, improve efficiency, cut costs or enable various business functions etc. More importantly, this industry is most nearest to customers/end users in value chain & hence “owns the customer”.

Electronics’ Device Manufacturers: That leaves electronics device manufacturers in the middle of value chain. Traditionally, they have been designing products using semiconductor chips & enabling the platform for software application developers. During semiconductor technology evolution stages, they had to design products with deep understanding of semiconductor devices, ambient & operating conditions. Circuit design would involve various compensations for performance & reliability, ambient effects, operating environmental effects (like noises) etc.

                As semiconductor technology is evolved & matured with sustained innovation, most functions’ performance & reliability requirements are met. For example, now electronics amplifier designers just don’t have to think much about offset or bias current drifts or play with limited bandwidth or common mode effects. If they could follow judicious process in selecting right device referring to manufacturer data sheets & application notes, most of design functions can be realized. The effect of this is that companies with limited competency in design or manufacture are now able to produce equal to or better devices than before. The design philosophy has shifted from in depth science & technology analysis to much simpler engineering & system integration of functions.  Semiconductor manufacturers are pushing through the value chain by producing custom chips, hardware modules or reusable/reprogrammable components.

                In summery, as electronics design is getting commoditized in terms of functional performance & reliability, the focus has shifted towards scalability & usability. It is more of an engineering art. In future, the trend shall shift towards ability to quickly configure & customize. For remaining applications, it shall drift towards commoditization.

Keys to New Product Success (Part – 3) – Need identification in early product lifecycle

  ”You are a product manager in company ABC, involved in electronic displays, sensing etc. One day, research team comes up with a novel product i.e. a display that can not only show images/movies in 3D, but also gives you 3D touch-feeling when you place your hand on display. The project is code named “3DSense”.  The research team has spent considerable amount of resources & time on this project. There are still many issues to be resolved. Due to increased pressure for meeting revenue targets & to streamline the research direction, they have approached you to make strategic product road-map that is driven by customer needs & also help to self sustain the budgets for further development.”

Now, you decide to talk directly to number of customers to understand their perspective. You are not convinced about the maturity of technology to serve few obvious applications. Without further customer interest/feedback, a place for pilot, a compelling application & a willing customer as technology stands today, the project would be shelved. How would you go about it & which customer segments & applications do you target?

•1.       First, understand possibilities: Technology is obviously in stage 1 of its lifecycle. There are underlying performance & reliability issues. Brainstorm with research teams, developers, engineering teams & understand various functions, technology can satisfy under different operating & ambient conditions. Also, list down external constraints (like platform related) for other adjacent applications.

For example 3DSense, functions that are readily satisfied could be touch-feeling for small surface unevenness, detection of sharp edges, differentiate hard & soft surfaces, feeling of objects greater than say 5mm, straight-line detection etc. There could be some constraints like temperature effects, performance issues for smaller objects, curved surfaces etc. There could be platform constraints like limitation of camera to sense effective 3D, large size data management, communication speed, compatibility issues etc. Some applications might require other companies in value chain to develop other complementing technologies/products for creating compelling applications. Make a complete dashboard of ready applications, adjacent applications with platform issues/supporting complementary technology issues etc.

•2.      Identify Compelling Applications: Prioritization is utmost important step. For applications, that technology could readily satisfy; selection shall be based on number of factors & is highly contextual. Some of factors could be; ability of product to become mainstream some day (& hence, market size & macro trends), ability to create value & its sustenance in a profitable manner, threat of alternates & substitutes, ability to reach out to customers with existing sales/channel force etc.

For 3DSense, the main stream application can be multi-media gaming industry, entertainment etc. Then there is no point in selecting say “reading-support for blind” as stage 1 user. The current VOC needs & trajectory in which technology develops from this application may not assist mainstream product. Also, stage 1 user may not be good reference for main stream segment. Instead applications such as remote operational or quality control might be good starting point. This application may have similar architecture, but demands for performance must be limited.

•3.      Identify user context: For the application identified, identify all user stake holders. Know who shall use it, how, where & under what constraints is he going to use it. What are important to him for doing his job better & how product is going to help him in that direction? User & thereby industry attitude or resistance towards adoption shall depend upon products that require user to change current mode of working, behavior, significant learning or require changing other current products or services. Hence, adoption shall depend upon their characteristic response to these changes. The acceptance is easier if product can just compliment the existing system with additional benefits.

•4.      Identify technology enthusiasts & industry innovative leaders: There will always be certain company which leads the industry with latest technologies & benchmark, which others follow. They understand initial short comings of new products; & are willing to use it & give necessary feedback. They like to work closely with development teams. These customers like to adopt new product, just to be ahead of industry or the solution offered to them should give a performance which is an order better.

                In summery, this stage throws up unique set challenges & technical performance issues. Early life cycle is the stage where early users/uses of product are defined. This will ultimately define how mainstream product shall look like & which are the segments, users & applications ultimately targeted. Create reference customers who will help in accelerating to main stream. They are unique in their needs & demands for functions, performance, price, customer support etc. They don’t represent the needs of mainstream customers, but act as stepping stone or gate keepers. The issues shall also be unique in terms of broader cultural & behavioral adaptability & acceptability, industry regulation issues & help evolving value proposition. Make & prioritize VOC targeted at these early adopters & early issues. Evolve the needs as product progresses to next stage of life cycle.