Orchestrating innovation as if it were the perfect wedding

I’ve recently been up to my eyes in data on design for profitability (otherwise known as design for supply chain or product lifecycle management). With 10 million vehicles now subject to recall by Toyota and General Motors, it’s clear that the links between supply chain and product development are worth studying.

Everyone seems to agree that early supply chain involvement in product innovation is good. Where the consensus breaks down, however, is around what early involvement should deliver.

Design for X: what is X?

For GM it was apparently “design for cost”. For Amazon’s new Fire TV set-top box it looks like “design for cross-sell”, with navigation that is super shopping friendly and heavily biased to nab incremental revenue.

For Disney, which recently introduced the MagicBand system to its theme parks, I’d say the target is “design for experience”. It’s a combination of technology, infrastructure, content and people all painstakingly aligned to give visitors the emotional jolt they (or their kids) want without the waiting.

For Apple, one might say it’s about “design for domination” – an ecosystem so closed, and yet so complete, that consumers develop loyalties deep enough to reconcile supply-demand imbalances with forgiveness.

Which of these comes closest to design for profitability? That depends on strategy. The steady blurring of lines that once separated purchasing and production people from R&D and creative people has happened across all industries and seems to be a good thing.

Data from our most recent Chief Supply Chain Officer Survey shows that supply chain organisations where new product development and launch (NPDL) skills are regarded as “essential” (383 of 728 respondents, or 53%) handle more complexity with better supply chain visibility and better talent development than those for whom NPDL is “not part of supply chain”.

Innovation integrators, as I call them, are also dramatically more concerned with revenue growth and even share prices than innovation isolators. Supply chain is usually at the table, and yet the definition of X remains elusive.

As process-orientated people, many in supply chain gravitate to things like engineering change cycle time, part reuse rates, budget adherence, and of course time to market. In our hearts we want to believe that continuous improvement will work here just like it does in manufacturing and logistics. And yet new product hits are still rare.

Having often failed to really pinpoint the target function we’re designing for, development projects generally proceed anyway. The secret may be to worry less about process and more about outcomes.

Throwing the perfect wedding

This coming Monday two dozen senior supply chain leaders from consumer, healthcare, hi-tech and industrial companies will meet at Raytheon’s world headquarters in Boston for a forum on design for profitability. We’ll hear how Raytheon, Colgate-Palmolive and General Dynamics approach this problem and what supply chain is doing to enable innovation in these companies.

Ahead of the event, attendees filled out a survey digging into a whole range of metrics, practices and attitudes. What emerges is less a picture of confidently hammering away at process goals and more a yearning for harmony among the players. Goodness attaches everywhere to “business” principles, whether in collaboration with suppliers, delivering to customers or co-ordinating internally.

The uber-goal is ultimately value, but no one can be certain it’s been reached until it happens. In fact, among six different business benefits we asked about, “on-schedule product introduction” was tops by a wide margin (see chart below).

Just like a wedding, the only thing that really matters is what happens on that magic day. And that depends more on orchestration than process discipline.

The difference between NPDL orchestration and its less sophisticated stage-gate precursor is that orchestration starts with a clear picture of that perfect wedding in mind and then works backwards to make things happen. Stage-gate innovation management starts with a big funnel of ideas at the front end and then winnows them down to a select few that get to market. It’s much better than nothing, but maybe in this case good is the enemy of great.

I have called out Apple in the past for great NPDL orchestration, and its profit story is hard to argue with. Microsoft’s Xbox launch took similar orchestration and I expect Disney to have a hit with the MagicBand. The key, more than process discipline, is having a clear, audacious vision of success.