Given the dynamic, borderless world, with an extremely discerning customer at every level, product design and development is assuming an ever more important role in the future success of companies.
At present, customers demand greater product variety and quickly shift to new, innovative products. Their purchase decisions are based on factors that are affected by product design. Earlier, customers made purchase decisions based primarily on product price and/or quality.
While these factors are still important, customers are looking at other dimensions, too, such as customisability, order-to-delivery time, product safety and ease and cost of maintenance. Especially in India, the business scenario has undergone a 10X change.
Five years ago, industrial customers expected delivery once a day; now they demand 20 shipments a day. Earlier, they expected six new products to be developed in a year; today they expect 11.
Environmental concerns have grown to include impacts during production, during the product's operating life, and also at the end of its life (recycle-ability). In addition, customers demand greater protection from defective products, which leads to lower product liability losses.
While these seem like too many aspects to consider, when firms are able to develop distinctive products that meet these customer requirements, they have opportunities to command premium pricing.
According to Professor Shoji Shiba, an expert in breakthrough management, to develop successful new products, it is important to have the Big M perspective, where M refers to manufacturing. The Big M perspective includes societal change, environment change, technology change, regulatory change, supply chain, feedback from customer, after sales service, suppliers and so on.
I believe that Indian companies need to expand their risk-taking appetite in order to come out with new products that can help to expand their markets and bring new customers into their fold.
Therefore, it becomes imperative for the R&D team or the product design team to interact closely with the customer-facing team and the customers themselves.
It is also the responsibility of other functions in the organisation to observe and absorb the weak signals from the environment and provide inputs to the product development team. In this sense, an organisation would do well to have a cross-functional team working on a new product design.
Taking inputs from these functions can help define latent customer needs -- needs that the customer himself does not know exist. The product design team must focus on developing products to meet these latent needs.
What is most important is creating products based on a deep understanding of the customer. You have to begin with understanding what would be most relevant, useful or appealing to the customer. How can you arrive at an understanding of the 'most relevant' when, at times, the customer himself may not know what would meet his need?
This can be achieved by what Shiba calls the 'jumping into the fishbowl' methodology. You must jump into the fishbowl and swim with the fish to make observations. It implies that the manager must visit customers where the product or service is being used.
He must experience the environment in which the product is used and then chart out the future course with the insights gained. Sometimes the insights gained may lead the organisation to develop a completely new business, or realise a new customer group or market -- it may not mean just a new product.
This exploration of new markets is what will lead to sustainable businesses. We need to change our mindsets about product design to include 'new features' to a much larger picture of satisfying latent customer needs and finding new customers.
Surinder Kapur is Chairman, CII Mission for Manufacturing Innovation & CMD, Sona Koyo Steering Systems Ltd
