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EXECUTIVE SUMMARYThe shift to designing global cars tailored to diverse local markets calls into question the appropriateness of many assumptions about how to organise new product development. The challenge is to create a new product development organisation that enables the achievement of opposites - maximising both commonality and diversity, simultaneously and without making compromises. A major issue to be addressed and resolved by companies aiming to develop products for global markets, or by firms wishing to supply these global players, is how best to organise new product development to achieve these conflicting goals. Any company that can simultaneously master both dimensions without making compromises will acquire a significant market advantage through its ability to foster diversity in the marketplace without paying a high price in terms of loss of potential to achieve economies of scale. The solution lies in organisational methods and the use of new information and communication technologies that enable radically different new product development practices that would otherwise be difficult or impossible to achieve. These enabling technologies include international information technology standards, computer-supported collaborative working technologies, knowledge-based systems, and virtual reality. Two major themes influencing the organisation of new product development are the emergence of a post-mass-production economy and the diversity of the global marketplace. The first theme is concerned with the development of rivalry between firms based on addressing global markets, providing extraordinary degrees of customer focus, using innovation to differentiate, exploiting the strategic value of time, and developing capabilities to deal with market turbulence. The second theme recognises that the diversity of global markets is not a function of just aesthetics, but also of local legislation and design standards, driving conditions, road conventions, climatic conditions, population characteristics, demographics, product replacement cycles and so on. Traditionally, new product development on a global scale has been organised on either a centralised model or a decentralised model. The first approach is based on the concept of a single global company with centralised design and development facilities. The second approach is based on the concept of a single enterprise establishing independent companies operating in each market region. The single global company is usually optimised to deliver economies of scale, but the price paid is often lack of responsiveness to local markets. The decentralised enterprise is normally highly responsive to local market conditions, but the price paid is duplication of facilities and effort and little scope for achieving economies of scale. The successful organisation of new product development to serve global markets with local products seems to rest on the creation of a global/local company which simultaneously displays both centralised and decentralised characteristics. Some aspects of the new product development process are centralised, while many other activities are reproduced in each market region, but in a way that achieves synergies, sharing and co-operation across regions in a network structure. Many firms during the late 1980s and early 1990s modernised their new product development processes, implementing overlapping design stages, cross-functional teams, product-focused organisations, etc. Firms that have mastered these modern design practices now need to improve the early stages of the new product development process. There are three main drivers for this new focus on modernisation. The first is the need further to increase customer orientation so as better to serve more diverse markets. The second is the increasing importance of innovation and the opportunity to differentiate products through new designs, concepts and technologies. The third is a search further to improve overall performance in terms of time, cost, quality and productivity by addressing at the outset many issues that normally do not get dealt with until much later during detailed design. One of the keys to successful new product development in the highly competitive automotive industry lies in developing differentiated new products that the customer sees as advantageous. Differentiation can be achieved through innovation. Innovations that customers find advantageous are developed through a close working relationship with customers that goes beyond traditional market research. Customer focus in a highly competitive industry where a buyer's market exists is achieved by integrating the customer into the process of design and development. This new perspective, called 'co-creating with customers', has four objectives. The first is to develop a good understanding of customer wants and needs, what they value and how they would make judgments about things like price/performance compromises. The second is to generate new opportunities by exploring with customers the potential of new technologies and by identifying future customer needs. The third objective of co-creation is to explore how goods and services can be combined to increase the value of product offerings. Finally, co-creation is used to enhance innovation by making use of customers' own ideas about how to improve a product or overcome problems. The techniques of co-creation will provide a means of addressing the needs of diverse global markets and customers. The traditional approach to innovation in the automotive industry is based on a development and banking method, so that innovations can be 'pulled off the shelf' when needed. However, this does not necessarily achieve linkage with customer- and market-driven product concepts. Also there is no guarantee that the right innovations will be available at the right time. Moreover, increasing reliance on outsourcing means that suppliers will more and more be expected to take over this development and banking activity with no guarantee that the developments will ever be used. A possible solution to this problem lies in developing a long-term customer-driven product plan and synchronising this with a long-term customer-driven technology component plan. Both plans would use the techniques of co-creating with customers to help formulate more detailed development plans, that would be focused on setting up a development schedule to introduce the right innovations into the right products at the appropriate time. Small firms working lower down the supply chain, that have yet to transform their new product development processes successfully to reduce costs and time to market and to improve productivity and quality, need rapidly to implement the modern techniques that are now normal practice in the industry. For these companies a fast change to achieve a major transformation of their new product development processes is becoming urgent. Some technologies that will be used by the larger automotive firms will also have to be implemented by smaller companies if they wish to retain their customer base. These technologies include international information technology standards and computer-supported collaborative working technologies, both of which will bring significant benefits in terms of time savings and cost reductions. Smaller firms are faced with new opportunities to become global suppliers by acting through global networks of co-operating firms, based on coalitions of complementary core competencies supported by information and communication technologies. New information and communications technologies, combined with new materials and design concepts, open up possibilities to undertake styling and dimensional changes to vehicles. These new technologies and techniques will enable the development of mass customisation capabilities - the ability to customise cars to individual requirements without significant cost penalties. Market turbulence will become increasingly an issue for companies in the years ahead. As a result, radically different new product development practices will be required. These will provide agile capabilities - the ability to deal with, and thrive in, a business environment characterised by change, uncertainty and unpredictability. Increasing environmental concerns may lead car manufactures in the not too distant future to re-evaluate their purpose. Instead of supplying customers with partial solutions based on goods such as cars, they may consider offering total solutions. These will be based on offering a mixture of goods and services, individually customised and continuously reconfigured in response to each customer's rapidly changing transport and communication needs. This approach may well be based on an environmental paradigm of managed consumption. |
Copyright © 2000, Cheshire
Henbury, Created by Paul T. Kidd, Revised July 2000
http://www.CheshireHenbury.com
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